U.S. equity markets staged a rally today as investors focused on upbeat economic commentary from the latest Fed Beige Book report. On the home front, the Nasdaq took the lead for another day, gaining 2.40% as the session ended, while the S&P 500 barely lagged behind, inching higher by 2.30%. Amidst the buying euphoria on Wall Street, the price of gold drifted sideways while oil popped; futures prices for the yellow metal and crude oil settled near $1,620 an ounce and $85.50 a barrel respectively.
The Fed commented on Wednesday that the U.S. economy had maintained a "moderate pace of growth" in May, bolstered by improvements in factory output as well as the real estate market. Hopes for additional stimulus intensified after Atlanta Fed President Dennis Lockhart mentioned that an extension of "Operation Twist" remains a viable option for the Fed. In international news, Australia's GDP blew past expectations; economic growth came in at 1.3% for the quarter, sailing past estimates of 0.6%.
The State Street SPDR DJ Wilshire International Real Estate (RWX) was one of the best performers, gaining 3.63% on the day. RWX gapped higher from the opening bell and bullish forces bolstered it higher for the rest of the day; this ETF closed near its high for the day at $35.42 a share. From a fundamental perspective, this ETF likely rose as the Fed made optimistic commentary about the economic recovery at home, citing improvements in the real estate market.
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, shedding a dismal 7.18% on the day. The Volatility Index continued to sink lower as uncertainty seemingly evaporated from the markets given the upbeat Beige Book coupled with growing stimulus hopes. The VIX is back below the 25 mark, although uncertainty levels will likely remain elevated until this indicator finds its way back below the 20 level.
Disclosure: No positions at time of writing.
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