Eurozone concerns intensified today, forcing stocks into a global sell off as investors flocked to their favorite safe haven investments. Markets have shown a strong if not unique resilience over the past few sessions, as a slew of recent bad global economic data was seemingly ignored by investors, who put their hopes in both a better-than-expected earnings season and an elusive central bank safety net swooping in to buoy the markets. As global economic uncertainty heightened, U.S. equities took a tumble: the Dow Jones Industrial average slid 0.8%, while the S&P fell 0.9% and Nasdaq came in at the bottom of the barrel with a loss of 1.2% [see also ETF Insider: Run For The Hills].
Today’s biggest headliner was Spain and its seemingly worsening debt crisis. According to one of the country’s local newspapers, six Spanish regions are set to request central government aid: solid evidence of the depth and severity of the region’s sovereign debt dilema. To make matters worse, the Bank of Spain reported the GDP shrank 0.4% in the second quarter, a significant contraction in economic growth. Germany was also in the spotlight today after the closing bell as Moody’s lowered the outlook for the powerhouse nation as well as its outlooks for Luxembourg and Netherlands. Today’s upheaval of market uncertainty also sent the 10-year U.S. Treasury yield to 1.435%, off a record low of 1.396 in the day. The euro also fell as far as $1.2067, a new two-year low against the dollar. In the commodities space, crude-oil futures also fell 4%, settling at $88.14 a barrel [see also Four Little Known Factors Driving The Price Of Crude Oil].
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the best performers today, gaining an incredible 6.52% during the session. With Euro Zone tensions back in the forefront, market uncertainty heightened, forcing this ETN gap higher at the open. VXX slid sideways for the rest of the day, settling a little bellow its high of $14.72 a share [see also Low Volatility ETFdb Portfolio].
The iShares’ MSCI Brazil Index Fund (EWZ) was one of the worst performers, shedding 2.61% on the day. As investors fled from riskier asset classes, like emerging markets, to their favorite safe haven investments, this ETF gapped significantly lower at the open. EWZ did however manage to inch up slightly higher throughout the session, but not enough to rise out of red territory [see also BRIC-or-Bust ETFdb Portfolio].
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Disclosure: No positions at time of writing.