Despite a relatively impressive jobs report, U.S. equity markets slumped in Friday trading as continued tension in the Middle East and North Africa hit the markets hard once again. The Dow was off by 88 points while the S&P 500 and the Nasdaq posted losses of 0.7% and 0.5%, respectively. Meanwhile, safe haven commodities roared higher as gold gained more than $14/oz. and oil rose by close to $3/bbl. as the prospect of further supply shocks weighed on a number of market sectors. This also carried over into the bond market where Treasury bills reversed their recent downtrend; traders piled into these safe assets, pushing the 10 year note’s yield below the 3.5% mark and the 2 year’s below 0.7%.
Today’s losses and flight to quality came despite a decent gain in total employment, as the figure reported was still under analyst expectations. Nonfarm payrolls increased by 192,000 in the month of February, enough to push the unemployment rate down to 8.9% but still far below the analyst expectations of 218,000 jobs. This news combined with more turmoil in Libya, as Gadhafi launched a counteroffensive against the rebels outside of the capital in Tripoli. At least 37 people died in the fighting, and with Gadhafi’s gains many are now expecting the strife to last much longer, potentially keeping oil prices elevated in the near term.
One of the biggest losers in the ETFdb 60 was the Financial Select Sector SPDR (XLF) which fell by 1.2% on the day. In addition to the jobs report, financials were off today because of a number of downgrades to some of the sector’s most important names. Bank of America analysts put Goldman Sachs and Citigroup at a ‘neutral’ rating down from ‘buy’, news that led to a broad sell-off in the sector. Citi finished the day down just under 3%, while Goldman (down 2.1%) and Morgan Stanley (down 3.0%) also fell on the news [see holdings of XLF here].
One of the biggest gainers on the day was the iPath S&P 500 VIX Short-Term Futures Fund (VXX), which rose by 2.5% in the session. Today’s gains were fueled by increase in demand for this ETN which tracks the ‘fear index’ and traditionally does well in times of market turmoil. Continued protests in the Middle East and further destablization in Libya added to demand for VXX, news that pushed up the fund handily on the day. Volume for the fund reached 31 million shares, thoroughly crushing the average volume of just over 12 million [see the fact sheet of VXX here].
Disclosure: No positions at time of writing.