American equity markets continued their run in Thursday trading as a solid Chicago PMI and declining jobless claims helped markets to end the quarter on a strong note. The Dow rose by 1.3% in the session, leading the broader indexes as the Nasdaq rose by 1.2% and the S&P 500 gained 1.0%. Commodities were more mixed on the day as gold lost close to $11/oz. and oil added a few cents, keeping the WTI benchmark just below the $95/bbl. level. Soft commodities were especially volatile, as products such as cocoa and coffee held firm, while crops such as corn and wheat plunged on the day by over 4% each. These sharp losses came despite a marginally weaker dollar and were on the back of a USDA report which suggested that acreage, and thus supply, of major grains would be up this season. Turning to Treasury markets, investors saw continued outflows from U.S. government debt as the debt ceiling issues continue to hang over the market. 10 Year debt saw yields rise to about 3.18% while the 2 year approached the 0.5% mark, finishing the session yielding 0.48%.
One of the biggest ETF winners on the day was the Industrial Select Sector SPDR (XLI) which gained 1.6% in Thursday trading. As predicted in today’s ETF to watch, the industrials sector was on the move today after the release of the Chicago PMI, which handily beat very gloomy expectations. Traders saw this key indicator surge to a reading of 61.1, well above analyst expectations which called for a drop down to 53.0. This figure led many analysts to believe that last month’s reading was somewhat of an aberration and that tomorrow’s key ISM report will show a rebounding economy. This along with a weaker dollar led many investors to be quite bullish on the U.S. industrial sector to close out the quarter, giving XLI a nice boost in Thursday trading [see holdings of XLI here].
One of the biggest losers in the ETFdb 60 was the PowerShares DB Agriculture Fund (DBA) which sank by 2.5% in the session. Today’s stiff losses came largely thanks to a USDA report which showed that 1.8% more acres of corn were planted than expected and that stockpiles were 12% higher than forecast for the key crop. Meanwhile, a similar situation took place in wheat trading as traders learned that farmers planted roughly 2.6% more wheat than estimates and inventories were roughly 4.6% above estimates as well. Thanks to this extra supply, investors sold off corn and wheat contracts in droves; corn fell by 4.6% and wheat plunged by close to 8.9% in Chicago trading. Soybeans also fell more than 2% on the news, helping to send shares of DBA plunging on the day as the product has roughly one third of its total assets in these three commodities. Only strong performances out of the coffee, cocoa, and sugar kept this product from turning in a far worse day to close out the quarter [see more on the DBA fact sheet].
Disclosure: No positions at time of writing.