Daily ETF Roundup: UNG Surges On Production Cuts, UUP Falls On Lackluster GDP

by on January 27, 2012 | ETFs Mentioned:

Today saw markets finish off relatively flat as traders mulled over the news of the most recent GDP results. While last quarter saw one of the biggest economic expansions in over a year, it failed to meet expectations, creating an environment of mixed emotions on the Street. Today watched both the euro and gold make steady gains, with gold nearing $1,750/oz. reigniting the debate as to whether or not this asset is truly worth what it trades for, or if is under/overvalued. Markets have also welcomed the news that Facebook may file for IPO by Wednesday of next week. With a potential valuation topping $100 billion, it would be the largest initial public offering in history [see also Three Reasons Why Gold Is Overvalued].

This week also saw Fitch hop in on the downgrading trend, despite their long upholding of many nations around the world. “Fitch downgraded the sovereign credit ratings of Belgium, Cyprus, Italy, Slovenia and Spain on Friday, indicating there was a 1-in-2 chance of further cuts in the next two years” writes Reuters. The news is hardly helping the euro zone, which sparked further fears this week that the Greek debt package may not go through as planned. If the Greek deal were to miss, it could have a major effect on markets and would put a halt to the nice rally we have seen in 2012. For now, we outline two of the most notable ETF performances on the day to help keep investors up to date with the latest happenings around the financial world [see also Early ETF Stars Of 2012].

One of the biggest ETF winners on the day came from the United States Natural Gas Fund LP (UNG), which tacked on over 4.6% in Friday’s session. This fund, which invests in front-month futures on natural gas contracts, has been under the microscope after stumbling out of the gates for the year. Despite losing nearly 25%, the fund has rallied over the past week and has the potential to close out the month near even if it can continue its hot streak. UNG’s big day came from pledges earlier in the week by Chesapeake and ConocPhillips to cut natural gas production, though some analysts feel that this is just a temporary fix. The ETF traded more than double its three month ADV making for an all around big day for this billion-dollar product [see also 25 Ways To Invest In Natural Gas].

On the other side of the equation, one of the biggest ETF losers was the DB USD Index Bullish (UUP) which dipped by 0.7% for today’s session. UUP, which tracks U.S. dollar futures, took a hit on today’s lower than expected GDP result. Though we still grew at a blistering pace of 2.8% last quarter, it failed to meet the benchmark of 3% set forth by industry analysts, prompting confused reactions from most of Wall Street. Perhaps the most frustrating aspect of the report was the outlook that suggested 2012 did not look very bright, leading many to believe that our current rally is close to subsiding [see also The 10 Most Profitable ETFs In The World].

Disclosure: No positions at time of writing.