Despite surging prices for oil, U.S. equity markets managed to finish the day slightly higher as positive data on the employment front pushed some traders into stocks. The Dow finished ahead by 8 points while the S&P 500 managed to gain 0.2%, but both gains paled compared to the 0.4% surge posted in the Nasdaq as semiconductors and Yahoo (YHOO) helped to carry the tech-heavy index higher for the day. Once again commodities broadly advanced during the session as gold hit another record - finishing the day at $1,435/oz. - and WTI crude surged by another $2.7/bbl. to close above the $102 mark. This also caused a sell-off in the U.S. dollar, which declined by close to half a percent against its major rivals while traders also headed for the exits in the Treasury market; yields were up across the board with the 10 year note finishing just below the 3.5% level.
Conflicting reports throughout the session were largely responsible for today’s choppy trading; positive developments out of Washington clashed with ongoing turmoil in the Middle East. First, sentiment was boosted by a report from the Fed in which the organization’s regional banks noted improvement in the labor market over the past two months thanks to improved retail figures and solid manufacturing numbers. Additionally, the ADP employment report for February was released, and it also highlighted a modestly improving jobs market. The company reported that private payrolls jumped by 217,000 in the month, handily beating the forecast of a 185,000 job increase. However, this positive data was soon overshadowed by continued tension in North Africa as the fighting intensifies in Libya and looks to spread to the Gulf region as well. “Oil back above $100 tempers any initial enthusiasm after the ADP release,” said Peter Boockvar, equity strategist at Miller Tabak.
One of the biggest gainers in the ETFdb 60 was the iShares MSCI Brazil Index Fund (EWZ), which gained 1.7% in Wednesday trading. Today’s gains were largely the result of a robust performance from top component Petroleo Brasileiro (PBR) which saw its ADR rise by close to 4.3% in the session. This was due to oil’s incredible ascent over the past few weeks and Petrobras’ role as one of the few companies with real potential to increase production in a region outside of the Middle East. Strong sessions from a number of other key commodities important to the Brazilian economy, such as sugar and livestock, also fueled gains for this popular South American ETF.
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One of the biggest losers in the ETF world was, once again, the United States Natural Gas Fund (UNG), which today tumbled by 1.5%. Natural gas futures again sank in Wednesday trading as many grew increasingly worried that tomorrow’s key EIA storage report would show a smaller-than-expected drawdown of the fuel, failing to dent the supply glut of the popular heat source. Warmer than average weather across much of the country has not helped this situation, while expansions in gas production could keep prices capped in the near term - allowing the fuel to build up a sizable stockpile before the summer cooling season begins. “The path of least resistance continues to be down and the bears remain in control,” said Brad Florer, a trader at Kottke Associates Inc. “Unless the storage numbers come out in an extremely bullish fashion, they are not going to have much of an impact on the upside.”
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Disclosure: Long EWZ.
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