Although markets dipped to start Tuesday trading, they soon erased their early losses and powered ahead to solid gains for the session. The Dow and the S&P 500 both finished ahead by 0.7% while the tech-heavy Nasdaq soared higher by just under 1% thanks to strength from AT&T (T), Qualcomm (QCOM) and Oracle (ORCL). Commodity markets also generally trended higher as oil rose by 72 cents a barrel and copper rose by 10 cents a pound. However, investors did slice away a small amount from precious metals on the day as gold fell by about $2.7/oz. and silver retreated by one cent in the session. This came despite a flat dollar as well as a slight exodus from U.S. Treasury bonds. Yields slipped across the board while the 10-Year Note saw its yield spike to just under 3.5%.
One of the biggest winners in the ETF world today was the PowerShares WilderHill Clean Energy Portfolio (PBW) which gained just over 2.0% in Tuesday’s session. Today’s gains were largely the result of continued concern over the Japanese nuclear situation and additional risks springing up from the BP Deepwater Horizon spill about a year ago. There were reports of plutonium in the ground and worries over the water from the plant spilling into the sea, potentially contaminating large swaths of the ocean around Japan, sending some stocks plunging as many had assumed the worst was now finally behind the nation. Meanwhile, reports of a corporate manslaughter charge being leveled against BP over the oil spill in the Gulf sent prices reeling and once again ignited fears over further charges stemming from the disaster. Both of these news pieces helped to turn investors to safe clean renewable fuels such as solar and wind power, helping to boost PBW in the process and further increasing the long-term appeal of these technologies (see holdings of PBW here).
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Once again, one of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which slid by 3.3% on the day. Today’s losses came after another batch of late-session selling hit the popular product, causing the fund to slide quickly lower on the day. This recent run of volatility may be due to the fuel entering its "shoulder season" or the in-between period that goes from the end of the winter heating session to the start of the summer cooling season. “During this period, prices historically have been volatile as the market moves out of winter mode, when volumes in storage decline, to summer, when they typically rise,” writes Matt Day of the WSJ. “Traders try to time bets to coincide with the shift, although they often are thwarted by unpredictable weather.” Thanks to this trend, investors should look for a rocky road ahead for UNG as the fuel cycles between these two important seasons (see charts of UNG here).
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Disclosure: Eric is long PBW.
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