Equity ETFs closed mixed Thursday, with the broad market recouping losses in late trading as investors remained uncertain amid today’s lackluster economic report and the ongoing negotiations in Europe that may ultimately push Greece out of the single-currency union. It was almost a repeat of yesterday’s afternoon rebound but less dramatic.
Domestic economic numbers failed to cheer as a Labor Department report showed people filing for first-time unemployment benefits declined by 2,000 to 370,000 last week while order for durable goods grew 0.2 percent in April.
Sentiments got a boost in the afternoon after Italian Prime Minister Mario Monti said he believed Greece will continue in the eurozone and the union may issue bonds jointly guaranteed by the 17 members. Sure, we’ve heard that before.
However, the demand for US safe haven assets remained robust with the auction of $29 billion seven-year Treasuries drawing record low yields of 1.203 percent, beating the previous April 26 low of 1.347 percent.
The Dow Jones Industrial Average (DJIA) advanced 33.60 points, with Dow component Hewlett Packard (HPQ) topping the charts. 21 stocks of the 30-component index closed higher for the day.
The S&P 500 Index (SPX) rose a meager 1.82 points with consumer staples rising the most and technology dropping the hardest among the 10 business groups.
In a sign of increasing risk appetite, Treasuries dropped today, pushing the benchmark 10-year yield higher as the President of Federal Reserve Bank of New York William Dudley said immediate monetary stimulus may not be required. Yield on 10-year notes climbed 3 basis points to 1.77 percent.
ETFs in the news:
The Guggenheim Airline ETF (FAA) soared today, gaining 3.53 percent for the day. US Airways Group (LCC), the funds fourth largest holding, raced ahead 9 percent on merger rumors. Airline firms have benefitted from falling oil prices, extra income from baggage fees and a strong demand.
As oil prices settled higher today, reclaiming the $90 level, oil linked ETFs advanced. The Invesco PowerShares DB Oil Fund (DBO) rose 0.54 percent for the day. However, since there’s not much clarity over Europe, it’s difficult to say if a sustainable oil price rally has started. Personally, I doubt it when considering the global economic slowdown that’s underway.
Among the day’s top losers, the Global X FTSE Greece 20 ETF (GREK) fronted the list, losing 5.09 percent. GREK follows the FTSE/Athex 20 Index, which tracks the broad based equity market performance of Greece. As European leaders failed to reach a consensus over the Greece crisis in Brussels Thursday, markets around the world turned choppy.
For the latest in regards to our Trend Tracking Indexes (TTIs), please see the most recent weekly StatSheet, which I will post shortly.
Disclosure: No holdingsContact Ulli