Stocks started off the week on a shaky foot, fluctuating between minor gains and losses in early trading, although optimism prevailed as the trading session drew to a close and indexes clinched gains. The Dow Jones Industrial Average posted a solid 0.26% gain on the day, while the Nasdaq lagged behind in green territory with a 0.07% gain. Investors took time on Monday to position themselves ahead of corporate earnings season, which kicks-off in after hours trading with Alcoa [see ETF Insider: Beware Of Lingering Euro Fears]. Gold inched lower on fairly light trading volume, settling near $1,610 an ounce for the day.
European markets were confronted with headwinds on Monday after news got out that the head of the Swiss National Bank, Philipp M. Hildebrand, would be resigning. The former chief decided to step down after it was revealed that he and has wife made currency trades over the last year that ultimately hurt his focus and ability to diligently perform his roles at the national bank. Uncertainty stemming from overseas paved the way higher for the U.S. dollar, although stocks on Wall Street were largely unaffected thanks to optimism surrounding the start of earnings season at home.
The iShares FTSE China 25 Index (FXI) was one of the best performers on Monday, gaining 2.13% on the day. Bullish momentum carried FXI higher after the latest New Yuan Loans report showed that the Chinese central bank had boosted “lending firepower”. The People’s Bank Of China restored confidence after it made an announcement over the weekend saying it would foster pro-growth conditions for entrepreneurs in the new year through an extensive lending initiative.
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, shedding 1.45% on the day. Volatility evaporated from domestic markets after investors rejoiced over the latest consumer credit report; borrowing increased by $20.4 billion, the biggest jump since November of 2001. The much bigger-than-expected jump in credit was seen as a sign of encouragement, perhaps signaling that employment conditions are gradually improving as households are willing to take on more debt [see Financials Free ETFdb Portfolio].
Disclosure: No positions at time of writing.
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