After celebrating the nation’s Independence Day holiday, U.S. investors were feeling less than cheery despite several seemingly positive announcements made today. With several central bankers across the globe scrambling to prop up their nation’s economies, many continue to be understandably left with the notion of a shaky if not faltering global economy. Instead, investors chose to focus on the alarming issue of broad economic weakness and as such, stocks failed to hold their ground: the Dow Jones Industrial Average dropped 0.2%, while the S&P 500 snapped its three-day winning streak with a decline of 0.3% and Nasdaq managed to stay out of red territory, closing essentially unchanged [see also Three ETF Strategies That Worked In Q2 (And Two That Didn't].
On the homefront, U.S. investors seemingly shrugged off better-than-expected jobs data, which reported a drop in weekly jobless claims and an addition of 176,000 jobs by private employers. U.S. service numbers also were reported today showing an expansion, but much less than predicted. Today’s biggest headliner was the reduction of several central bank’s leading interest rates. The European Central bank lowered its rate by 25 basis points, while China’s central bank made their second interest rate reduction in less than a month. The Bank of England, however, kept rates unchanged, but announced its addition of $78 billion in funds to boost their bond-buying program [see also Inside Natural Gas And UNG's Wild Q2].
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the best performers, gaining 3.60% on the day. As investors continue to remain uncertain about the global economic recovery, market volatility spiked today, skyrocketing this ETF during early morning trading hours. VXX closed just shy of its high of $14.56 a share [see also Low Volatility Portfolio].
The Vangaurd European ETF (VGK) was one of the worst performers, shedding 2.28% on the day. Although central bankers took steps to help boost the plagued European economy early this morning, initial enthusiasm quickly faded. As such, VGK gapped significantly lower at the open, and continued to slide sideways along with stock markets [see our Euro Free Europe ETFdb Portfolio].
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Disclosure: No positions at time of writing
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