US stocks took a break to close lower Tuesday, as the day’s economic data gave investor’s little reason to cheer about after Monday’s rally.
Treasuries rallied today showing not everybody believed that the bond bear market started Monday when economic reports showed decline in home consumer confidence and prices. Demand for US debt was well supported at a government sale of $35 billion in two-year notes being recorded at 3.69, versus an average of 3.53 for the past 10 sales.
The Dow Jones Industrial Average (DJIA) dipped 0.3 percent to 13,197.73 on weak economic data after rallying more than 1 percent Monday. Home prices in 20 major US cities declined 3.8 percent year-on-year in Jan to hit the lowest level since 2002, according to S&P/Case-Schiller index. There was little to cheer on consumer confidence as the Conference Board’s Consumer Confidence Index also dipped to 70.2 in March from 71.6 in February.
The S&P 500 Index (SPX) shed 0.3 percent to close at 1412.52 with the utilities advancing the most. Financials in the 10-sector index were the biggest losers.
The tech-heavy NASDAQ Composite (COMP) dropped 0.1 percent to end at 3120.35.
Despite today’s losses, the Dow has climbed 8 percent, the S&P 500 has added about 13 percent and the NASDAQ is up over 20 percent this year.
ETFs in the news:
The fear-tracking iPath S&P 500 VIX Short-Term Futures ETN (VXX) bounced back by adding 9.8 percent after yesterday’s slide. The leveraged version of the product, VelocityShares Daily 2X VIX Short Term ETN (TVIX), also made a turnaround after a four-day losing streak.
The iShares Dow Jones U.S. Home Construction Index Fund (ITB) added 1.9 percent despite the S&P/Case-Schiller Index dropping to its lowest level since 2002 in January. The SPDR S&P Homebuilder ETF (XHB) also moved up indicating the markets have possibly bottomed out. However, caution is advised as this could be a temporary halt before downward momentum resumes.
The WisdomTree Japan Hedged Equity ETF (DXJ) climbed 1 percent as the Nikkei 225 jumped to last year’s pre-Tsunami/earthquake level.
The Market Vectors Vietnam ETF (VNM) topped the chart for decliners, dropping 3.03 percent on the day. The fund seems to have run out of gas despite starting the month on a strong note.
The misery at iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) continues for the fourth-day as the ETN shed 3.03 percent today. Extreme caution is advised as the ETN’s heavy premium continues to erode steadily.
The Van Eck Market Vectors Gold Miners ETF (GDX) shed 1.42 percent as gold prices retreated today along with equities. This counter is down about 3 percent on year-to-date basis.
While it’s too early to tell if Monday’s “Bernanke equity boost” is over, we are at elevated levels in the market place only due to Fed support and not because of solid economic fundamentals.
That’s how I see it at this time, which also means that, after a relentless move up YTD, the downside has certainly come into play.
Note: The updated ETF Model Portfolio report will be posted early Wednesday morning
Disclosure: No holdings
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