US Equities End Mixed On Europe Concerns; ICF Crawls Up, VXX Sinks

Ulli Market Review 2 Comments

[Chart courtesy of MarketWatch.com]

US equities ended mixed Monday despite higher corporate earnings and better-than-estimated retail sales boosting sentiments as investors weighed US economic data with a contagion possibility in Europe.

Heavy selling in the tech area more than offset a rebound in blue-chip stocks, dragging the major US indices down. Yield on benchmark 10-year Treasuries consolidated below the 2-percent mark for the second straight day as risk was off on mounting speculations of a deepening European debt crisis.

The Dow Jones Industrial Average (DJIA) jumped 71.82 points, flirting with the 13K mark but was unable to breach it. The Commerce Department said retail sales rose 0.8 percent in March ahead of the day’s opening bell, beating analysts’ expectation of 0.3 percent.

However, a separate report showed manufacturing activity in the New York region expanded at the slowest pace in five months, spooking investors.

The S&P 500 Index (SPX) shed dropped 0.1 percent. Tech stocks retreated the most, slipping 1.2 percent, followed by consumer discretionary. Financials and utilities advanced in the 10-sector index Monday.

Shares of Apple (AAPL) dropped 4.2 percent while search engine giant Google lost 3 percent – extending losses for the second straight day.  The combined losses of heavyweights Google and Apple drove the NASDAQ Composite (COMP) down 0.8 percent to 2988.40, making it the day’s worst performing major index.

Treasuries gained for the second day on the trot, pushing yields down to the lowest level in five weeks as Spanish bond yields briefly breached the 6 percent mark before this week’s debt auction. The benchmark US ten-year yield dropped 0.01 percent to 1.97 percent following its 0.07 percent drop on Saturday.

ETFs in the news:

As US equity markets started the week on a shaky note, real estate ETFs witnessed some strength Monday. The iShares Cohen & Steers Realty Majors Index Fund (ICF) added 1.55 percent on the day, while another real estate fund, the iShares Dow Jones U.S. Home Construction Index Fund (ITB) ended in the green as well. The Vanguard REIT ETF (VNQ) also posted decent gains, adding 1.37 percent for the day.

Despite global equity markets witnessing economic headwinds, the Market Vectors Vietnam ETF (VNM) came in strongly today, climbing 1.83 percent. VNM’s history of uncorrelated performance makes this fund difficult to predict.

The United States Natural Gas Fund (UNG) surged 1.34 percent despite energy-related products witnessing some volatility.  The premium-heavy iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) however, retreated for the day.

Among the day’s top losers, the fear-tracking product iPath S&P 500 VIX Short Term Futures ETN (VXX) dropped 1.55 percent even though major market indexes slipped Monday.

The iShares MSCI Russia Capped Index Fund (ERUS) dropped 2.19 percent as energy producers continue to suffer across the board. ERUS has substantial exposure in energy producers like Gazprom and Lukoil, and hence is susceptible to energy sector volatilities.

The Van Eck Market Vectors Gold Miners ETF (GDX) slid 1.81 percent, which was surprising since gold futures ended the day higher. GDX has hit a rough patch recently as precious metal producers are struggling and bullion-backed products are witnessing weak action.

Disclosure: Holdings in VNQ

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Comments 2

  1. Uli…What do you use to create the TTI (trend tracking index). I would like to create my own charts, but I cannot find a trend tracking index. Also how does one create the short fund composite? If they are propritary, I will respect your work and try and create one (not as good as yours) on my own.

    Thank you

  2. Esteve,

    They are indeed proprietary indicators that I designed back in the 80s.

    Ulli…

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