After weeks of uncertainty, investors finally got the validation they apparently needed – Draghi, the European Central Bank’s President, expressed that the ECB will do whatever it takes to preserve the common-currency union. Although Draghi was not specific with the details of exactly how central bankers will do this, his sworn commitment was seemingly enough to sway investors. And with the full backing of the ECB to shore up the Euro Zone, U.S. equities rose sharply higher: the Dow Jones Industrial Average surged 1.7%, the biggest gain in nearly a month, while the S&P 500 also rose 1.7% and Nasdaq cinched a nice gain of 1.4% [see also Seven Simple & Cheap ETF Model Portfolio].
On the macroeconomic front, U.S. durable goods orders for June came in significantly better than expected at 1.6% versus the forecasted 0.3% increase. Weekly jobless claims fell far more than expected last week, a pleasant surprise for the fragile labor market. In the commodities space, gold and oil got a boost today from a spike in the euro against the dollar. 10-year U.S. Treasury yields also rose to 1.429% [see also Were Gold and Silver Manipulated Alongside LIBOR?].
The iShare’s Dow Jones U.S. Telecommunications Index Fund (IYZ) was one of the strongest performers, gaining 4.21% on the day. Sprint Nextel reported a narrower-than expected loss, pushing the stock and this ETF considerably higher. IYZ gapped significantly higher at the open, and inched higher throughout the day, settling just below its high of $23.10 per share [see also High Tech ETFdb Portfolio].
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, shedding a dismal 7.61% on the day. Increased confidence after Draghi’s announcement helped market volatility to cool off, forcing this ETF to gap significantly lower at open, only to slide sideways through out the trading day [see also Commodity Stock Plays in the 2012 Dogs of the S&P].
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Disclosure: No positions at time of writing.