Mid Day Roundup: Stocks Pop On Stimulus Hopes After Sour Data

by on June 14, 2012 | ETFs Mentioned:

U.S. equity markets held their ground this morning, exhibiting utter disinterest in any sort of Euro Zone drama that continuously tries to take center stage. While seemingly not caring at all about the latest Spanish crisis developments, stocks surged forward, bolstered by an unexpected increase in initial claims for unemployment benefits. Although this data is not necessarily “good”, it does give rise to hopes that the elusive QE3 might be more likely to be set into action. Since nothing in the morning news constituted this rally, investors will have to be satisfied with “renewed” hopes being the reason for today’s uptick [see also Seven Simple & Cheap ETF Model Portfolio]. 

On the macroeconomic front, tensions in Egypt flared up again as the country’s highest court ruled to permit Mubarak’s last prime minister to run in the presidential elections this weekend, and consequently ruled for the dissolution of both houses of Egypt’s parliament. As the country struggles to transition from a military rule to democracy, this verdict poses a great threat to Egypt’s political and economic future. Investors in Van Eck’s Egypt Index ETF (EGPT), have experienced the direct impacts of the country’s turmoil over the past month; EGPT is currently down 6.55% on its 4-week return [see our Africa-Centric ETFdb Portfolio].

Commodity markets got a big surprise today, as one of the most cringe-worthy futures contract got an unexpected boost this morning. The U.S. natural gas storage data was reported at 67 billion cubic feet, significantly lower than the expected 75 bcf. The latest decline indicates that more natural gas was used in the past week than was expected, prompting investors to buy in as demand consequently increased. Additionally, a drop in inventory levels also translates to a rise in prices as the commodity becomes more scarce. Despite the recent surge, investors will likely keep a close eye on natural gas considering its rather grim track record [see also 25 Ways To Invest In Natural Gas].

Below we highlight one ETF that has been impacted by today’s major headlines:

United States Natural Gas Fund (UNG)

With lower than expected natural gas inventory levels, this ETF gapped higher at the open only to surge even higher during mid morning hours. UNG is currently up an impressive 11.89% (as of 11:30 June 14, 2012), and looks as though it may continue its uptrend.

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Disclosure: No positions at time of writing.