Daily ETF Roundup: VXX Surges On French Downgrade, UNG Stumbles On Natural Gas Outlook

by on January 13, 2012 | ETFs Mentioned:

Friday the 13th reared its unlucky head on markets today as equities took a bit hit on some major events. Despite all of the bad news that plagued markets, equities were able to resist a major sell-off that would be expected given the severity of today’s headlines. The Dow lost about 50 points while the S&P 500 dipped by about 0.5%; to put it quite frankly, the day could have been much worse. After Standard and Poor’s announced the official downgrade of France, investors quickly became fearful that the news would infect the markets and spark a sell-off like the one we saw last August when the U.S. suffered a downgrade [see also Analyzing Five High Yielding Oil & Gas Pipeline Stocks].

But all things considering, today’s meager losses can almost be considered a win given that there was an opportunity for them to be more significant. Be advised, however, that we are not out of the fire yet, as S&P announced after market close that it would be downgrading eight more nations, creating hefty anxiety about the coming week.. Amid all of the chaos, the euro plummeted to a 17-month low as the EUR/USD exchange rate is currently sitting at 1.268, quite a ways off from its levels earlier in 2011. In an effort to keep investors educated on all of today’s market events, we outline two of the most significant ETF moves on the day [see also ETFs To Play AAA Europe].

One of the biggest ETF winners on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX), which jumped by about 2.7% on this “unlucky” trading day. The news of the French downgrade tore through markets mid-way through the day. Though major indexes were able to hold their ground, VXX was still able to prey on the volatility presented in today’s trading. This fund, which is down 11% thus far in 2012, saw its average daily volume jump from 12.5 million to over 21 million on the day as investors piled into this speculative trading tool. Note that a less-than-enthusiastic earnings report from JP Morgan also helped VXX find its groove for the session.

One of the biggest ETF losers from Friday’s session came from the United States Natural Gas Fund LP (UNG), a frequent flier as far as the “Daily ETF Roundup” is concerned. Many investors were hopeful that colder temperatures around the country would drive up demand and relieve natural gas of its bottomed-out prices. But the hit UNG took on the day, with losses totaling to 3.9%, were not concerning current weather patterns. The hit came from a dismal outlook for NG in the coming year  from two respected agencies. “Earlier in the week, as natural gas spot market pricing hit its lowest level in eight months, predictions surfaced calling for a natural gas spot price under $2 in 2012″ writes Eric Rosenbaum [see also 25 Ways To Invest In Natural Gas].

Disclosure: No positions at time of writing.