Major Market ETFs gained for the second straight day Wednesday as investors offered muted reactions to the news that the Fed is keeping its interest rate target unchanged and cheered strong Q1 performance from big US companies including Apple and Boeing.
Following Wednesday’s Federal Open Market Committee meeting in Washington, Chairman Ben Bernanke dropped enough hints at a press conference that the central bank would undertake additional quantitative measures if economic growth slowed.
That’s what the Wall Street crowd wanted to hear, and the Dow Jones Industrial Average (DJIA) jumped 0.7 percent, advancing for the second day in a row. All but 6 of the 30 components progressed for the day.
The S&P 500 Index (SPX) gained 1.4 percent with the tech sector topping the day’s gainers list. All of the 10 industry sectors closed higher.
The NASDAQ Composite Index (COMP) took top billing and soared 2.3 percent leading the three indexes and closing above 3000 since Friday. iGadget maker Apple (AAPL) remained the day’s top dog after the world’s biggest company nearly doubled its Q1 profits.
Treasuries slumped for the second day in a row after Bernanke indicated that expansionary monetary tools remain on the table if growth slows. Benchmark 10-year yield rose 0.01 percentage points to 1.99 percent, while yield on 30-year bonds inched up 2 basis points to 3.15 percent after hitting a high of 3.19 percent during the day’s trade.
ETFs in the news:
The State Street Technology Select Sector SPDR (XLK) remained on top of the heap, adding 2.81 percent after Apple declared blowout sales and profit data yesterday. The tech sector rallied today following yesterday’s slump, thanks to Apple’s near 9 percent jump.
The iShares MSCI Italy Index Fund (EWI) added 3.56 percent for the day as EU-related products showed strength, recovering the heavy losses suffered last week.
The Vanguard Information Technology ETF (VGT) rose 3.04 percent as Apple continues to confound analysts with its stunning growth. The Cupertino based consumer tech company rallied close to 9 percent today, pushing ETFs higher that have exposure to the stock.
Among the day’s losers, the iPath Short Extended S&P 500 TR ETN (SFSA) topped the charts, losing 10.97 percent over Tuesday’s closing. The 3X leveraged products amplify both gains and losses. Stay away from this ETF if volatility is not your middle name.
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) tumbled 6.09 percent for the day, as risk appetite remained well supported on Bernanke’s further QE hint, driving the so-called fear-tracking VIX index lower.
Our Trend Tracking Indexes (TTIs) headed higher as well and closed the day as follows:
Domestic TTI: +4.70%
International TTI: +3.36%
Disclosure: No holdings
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