Equity ETFs rebounded Thursday following a streak of five down days that had wiped out more than 3 percent of the major indices, as concerns over Spain eased and hopes for better-than-expected profits rose ahead of the earnings season following Alcoa’s surprise profit surge.
US Treasuries retreated after six sessions of gains amid rumors that Madrid wouldn’t require a Greece-style bailout as Spanish and Italian bonds climbed on robust demand. I don’t believe this for a minute; to my way of thinking, it’s just a matter of time when the need for another bailout makes front page news. The only question remains is “who’s next?”
The Dow Jones Industrial Average (DJIA) settled 0.7 percent higher led by aluminum producer Alcoa (AA), while the S&P 500 Index (SPX) climbed 0.7 percent to 1368.71, as financials advanced the most and energy faring the worst among the 10-sector index.
Treasuries retreated as yield on current ten-year notes climbed 0.05 percentage points to 2.03 percent. 10-year benchmark yields had earlier slipped to 1.99 percent late Tuesday.
ETFs in the news:
As risk sentiment improved today, investors turned their focus on emerging markets for added upside. The Market Vectors Vietnam ETF (VNM) surged 4.96 percent, as broad market indices turned positive following an extended losing streak. However, emerging market funds show far more volatility, which is why I recommend a higher trailing sell stop (10%).
Solar energy funds are pushing higher after stocks snapped a five-day losing streak today. The Guggenheim Solar ETF (TAN) jumped 4.24 percent, posting its first gain since March. The sustained downturn had pushed this product to all-time lows.
The iShares MSCI Spain Index Fund (EWP) made a smart turn-around after five days of battering, jumping 3.12 percent on the day. However, I would not touch this ETF as the Eurozone crisis remains unresolved and Spain is right in the center of it.
The State Street SPDR Homebuilders ETF (XHB) bounced back today after having been featured on the loser’s list yesterday. The fund added 2.86 percent on the day, still short of Monday’s opening price. The fund is up about an impressive 20 percent since January.
The iPath S&P 500 VIX Short Term Futures ETN (VXX) shed 2.25 percent as the so-called fear-tracking VIX index dropped. Better news from Europe and Alcoa’s surprise profit jump lifted risk sentiment today, causing VXX to lock-in its first April loss.
The United States Natural Gas Fund (UNG) dropped 2.17 percent as natural gas prices continue to weaken, touching levels not seen since 2002.
The iShares Barclays 20+ Year Treasury Bond Fund (TLT) slipped 1.20 percent after a four-day winning streak that wiped out nearly all of its March losses. The fund is likely to rebound in the days ahead if the Eurozone’s continued debt crisis fails to show signs of improvement.
Disclosure: Holdings in TLT
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Comments 1
For a very long time, I’ve wondered what or who made stock market analysts so powerful and influential with their pronouncements and expectations. Stock values seem to rise and fall based upon meeting and beating expectations. Most analysts seem to work for big brokerage and financial firms with most of their time promoting stocks and companies they’re paid to shill for. No one seems willing to provide or venture an answer to this question.