By Daniela Pylypczak
After getting off to a strong start, domestic equities declined sharply as investors grew skeptical of whether or not this past weekend's Spain bailout agreement will help boost confidence in the country's economy. With many interpreting this as another "last-ditch" attempt to quell eurozone fears, panic selling quickly ensued. The Dow Jones Industrial Average snapped its four-day winning streak, shedding 1.1%, while the S&P 500 and Nasdaq dipped into red territory as well, losing 1.3% and 1.7%, respectively.
As with all of the recent eurozone developments, investors were simply unconvinced of the EU's actions towards staving off the next wave of sovereign defaults. In the latest bailout plan, Spain agreed to accept up to $125 billion to recapitalize banks, but contrary to the hopes of government officials, confidence in Spain's economy continues to decline. Despite this rather grim outlook, China managed to paint a brighter picture over the weekend as Chinese New Yuan Loans came in better-than-expected: New yuan loans totaled 793.2 billion yuan in the month of May, nearly 100 billion yuan more than predicted.
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the best performers, gaining 7.66% on the day. VXX gapped lower at the start of the trading session only to charge higher throughout the day. Higher levels of volatility prompted by uncertainty from the looming Spanish debt drama bolstered this ETF to close near its high of the day just shy of $20.01 a share.
The United States Natural Gas Fund (UNG) was one of the worst performers, shedding a dismal 4.00% on the day. Natural gas futures declined Monday as worries over Spain paved the way higher for the U.S. dollar, creating downward pressure for commodities across the board. UNG closed near its low point for the day just shy of $15.29 a share.
Disclosure: No positions at time of writing.
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