Today’s Federal Reserve monetary policy announcement and upsetting economic data put selling pressures back on Wall Street, as bearish sentiment quickly swept over recent earnings euphoria. The central bank indicated that it will continue purchasing $85 billion each month of long-term Treasury and mortgage-backed securities, stating that economic activity has “paused in recent months”. To add insult to injury, U.S. GDP came in unexpectedly at an anemic 0.1% decline, bucking economists’ expectations of a 1% uptick [Be sure to check out the real estate news, trends, tips and tricks over at Dividend.com].
After today’s Fed announcement and lackluster GDP report, all three major U.S. equity indexes pulled back, closing in negative territory. The Dow Jones Industrial Average ETF (DIA, A-) logged in a 0.34% loss, as its underlying index shifted further away from the psychologically-important 14,000 level. The S&P 500 ETF (SPY, A) fell 0.39%, while the tech-heavy Nasdaq ETF (QQQ, B+) slipped 0.21%. In Europe markets were mostly lower after Spain’s fourth quarter GDP came in lower than expected. Asian equities, however, were mostly higher after Japan reported better-than-expected retail-sales data. Also bolstered by a weaker yen, Japan’s Nikkei Stock Average rallied 2.3%.
Bond ETF Roundup
U.S. Treasury prices rose today, snapping a four-day losing streak, after the central bank said it would continue its massive economic stimulus. Yields on 10-year notes and 30-year bonds declined roughly 1 basis points, while short-term securities quickly swung to gains following the statement [see also Seven Simple & Cheap ETF Model Portfolios].
Gold and silver futures took the spotlight today, as investors piled back into the safe haven metals following the Fed’s announcement. Crude oil also closed higher today despite lackluster domestic growth data as investors became more optimistic about China’s economy.
ETF Chart Of The Day #1: (VXX)
The S&P 500 VIX Short-Term Futures ETN (VXX, B+) was one of the best performers today, gaining a whopping 6.17% during the session. Following today’s Fed announcement and upsetting GDP data, this ETF gapped significantly higher at the open. VXX rose higher throughout the day, eventually settling near its high of $24.33 a share [see Risk On ETFdb Portfolio].
ETF Chart Of The Day #2: (LBND)
The 3x Long 25+ Year Treasury Bond ETN (LBND, C) was one of the worst performers today, shedding 1.14% during the session. As the central bank announced its plan to continue to purchase $85 billion each month of long-term Treasury and mortgage-backed securities, this leveraged ETF gapped significantly lower. LBND slid sideways for the remainder of the day, eventually settling at $42.35 a share [see The Sky Is Falling Portfolio].
ETF Fun Fact Of The Day
The best-performing retirement strategy over the trailing one-year period has been the 30 Years Til Retirement Portfolio, which has gained over 17%.
Disclosure: No positions at time of writing.