Investor confidence was shot on Wall Street this morning, as a slew of lackluster economic data sent U.S. equities into a tailspin. Yesterday’s “semi-comforting” Fed announcement of the continuation of Operation Twist could not help bolster markets today, while the less than cheery reports from Europe and China only added to the growing list of investor worries. Sending up even more red flags was the continued decline of commodity prices, as copper and crude oil, the leading indicators for industrial activity, weakened to levels reflective of the growing concerns surrounding a global economic slowdown [see also Three ETF Charts That Sum Up 2012].
U.S. economic data painted a rather grim picture this morning, as poor jobs data signaled a major struggle in the labor market. U.S. existing home sales also came in worse than expected in the month of May, while other data showed home prices are on the rise. Adding to the dreary outlook, the Federal Reserve Bank of Philadelphia indicated a severe decline in Mid-Atlantic manufacturing. The Philly Fed did however express that their outlook for future activity is still positive, “suggesting that the current weakness in activity is expected to be short-lived” [see ETF Technical Trading FAQ].
Below we outline one ETF that has been impacted by today’s major headlines:
Barclays iPath DJ-UBS Copper Total Return Sub-Index ETN (JJC)
The severe drop indicated in Philly Fed’s manufacturing survey combined with less than promising economic growth outlooks, sent this ETN into a free fall this morning, plummeting 2.4% (as of 11:45 June 21, 2012). JJC gapped significantly lower at the open, only to fall even lower throughout mid-morning trading hours. Considering the industrial sector’s dependence on copper, investors will likely keep a close eye on this commodity as it often times serves as a good indicator of industrial growth and economic activity [see our Commodity Guru ETFdb Portfolio].
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Disclosure: No positions at time of writing