By Daniela Pylypczak
Volatility struck Wall Street today as investors weighed the latest eurozone and domestic developments, forcing stocks to close roughly where they started. While Greece secured a consensus for a coalition government, U.S. central bankers announced their continuation of the stimulus package “Operation Twist”. Somewhat disappointed with the Fed’s “mild” reaction to the struggling economy, stocks closed on a mixed note: The Dow Jones Industrial average shed 0.10%, while the S&P lost 0.17% and Nasdaq came out on top, cinching a slight gain of 0.02%.
After weeks of riding on the hopes of the elusive QE3, investors finally got some answers, but perhaps not exactly the ones they wanted to hear. Although the Fed announced that it would extend Operation Twist through the end of the year, it did not decide to take a more aggressive approach to boosting the economy as many investors had expected. The Fed, however, indicated that it is willing and “prepared to take further action” if needed. While this news may be optimistic and somewhat comforting, the Fed’s economic outlook on growth and employment have altered, painting a rather grim picture for the U.S.
The Invesco PowerShares WilderHill Clean Energy Portfolio (NYSEARCA:PBW) was one of the best performers, gaining 1.14% on the day. While tensions somewhat eased after today’s Fed meeting, this ETF inched higher as investors slightly increased their risk appetites. PBW settled just shy of its high of $4.48 per share.
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) was one of the worst performers, shedding 4.21% on the day. Restored optimism from the Fed and positive developments in the eurozone helped quell investor fears and cool off volatility. VXX spiked during early afternoon trading hours, then proceeded to free fall after Ben Bernanke’s conference.
Disclosure: No positions at time of writing.
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