U.S. equities rallied in complete and utter defiance today, seemingly shrugging aside the slew of bad news that bombarded the markets. Euro Zone drama unsuccessfully tried to take center stage yet again, as Spanish bond yields hit euro-era highs. Reports also indicated that U.S. job data has worsened, and yet stocks barreled through, bolstered by only an idealistic notion — hope. Investors interpreted the latest developments as a sign that perhaps the elusive QE3 might be put into action sooner rather than later. As investors place their hopes in the hands of the Fed, stock markets rallied: the Dow Jones Industrial Average came out on top with a gain of 1.1%, while the S&P 500 shot up 0.9% and Nasdaq inched 0.2% higher [see also 101 ETF Lessons Every Financial Advisor Should Learn].
U.S. consumer prices fell in the month of May, as declining gasoline prices helped offset higher rent and medical-care prices. Although this data helped quell inflation fears, investors were forced to digest poor job reports as initial claims for unemployment benefits unexpectantly rose above expectations. Commodity markets did, however, get an interesting surprise today: natural gas, a commodity known for its grim track record, finally got its break as lower than expected inventory data sent natural gas prices skyward [see also 25 Ways To Invest In Natural Gas].
The United States Natural Gas Fund (UNG) was the best performers, gaining an incredible 14.97% on the day. With lower than expected natural gas inventory levels, this ETF gapped higher at the open only to charge even higher throughout the day. UNG closed near its high, just shy of $17.53 per share [see Why UNG is Up 15% Today].
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, shedding 6.21% on the day. Renewed optimism for the Fed taking taking further measures to boost the economy helped quell investor fears and cool off market volatility . Despite today’s drop, the Volatility Index (VIX) remains slightly above the 20 mark, which suggests that uncertainty levels remain elevated [see The Compelling (And Simple) Case For Low Volatility ETFs].
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Disclosure: No positions at time of writing.