Daily ETF Roundup: UNG Pops, VXX Drops

by on May 1, 2012 | ETFs Mentioned:

Equity markets rallied on Tuesday as investors rejoiced over encouraging manufacturing data on the home front. Major indexes started off the day with a bang and climbed higher throughout the session, only to give into a wave of profit-taking in the final hour of trading before the closing bell. On Wall Street, the S&P 500 Index took the lead, gaining 0.57% on the day, while the Nasdaq lagged behind, inching higher by just 0.13% as the day drew to a close [see also Five ETF Lessons In Pictures].

Better-than-expected manufacturing data bolstered confidence in the domestic recovery; the ISM figure for April came in at 54.8%, sailing past estimates of 53.3% as well as last month’s reading of 53.4%. Construction spending on the other hand was mixed; this figure grew by 0.1%, falling short of the 0.5% estimate, but ultimately improving quite considerably from the previous reading of negative 1.4%. In international news, the Reserve Bank Of Australia cut its rate from 4% down to 3.75%, sparking a wave of volatile trading in the currency market [see also 5 ETF Experts You Need To Follow On Twitter]. 

The United States Natural Gas Fund (UNG) was one of the best performers, gaining 2.99% on the day. Natural gas futures have been climbing higher for the past week, staging an impressive rally of 20%; unfortunately, this comeback pales in comparison to the absolutely dismal performance of this energy commodity over the past few months.  As such, some traders are placing bets at these attractively-low price levels given the tremendous upside potential; however, keep in mind that UNG has lost close to 30% year-to-date, making a long position in the fund quite speculative for many investors [see also Energy Bull ETFdb Portfolio]. 

The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, shedding 3.26% on the day. Uncertainty evaporated from the market as investors rejoiced over stronger-than-expected manufacturing data, which helped bolster confidence in the domestic recovery. The Volatility Index had a steep drop-off in early morning trading as major equity benchmarks exploded to the upside, ultimately managing to settle around the 16.50 mark as the trading session drew to a close [see Low Volatility ETFdb Portfolio]. 

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Disclosure: No positions at time of writing.