Equity markets drifted sideways on Wednesday as investors digested good news from overseas along with worrisome corporate results at home. The Nasdaq led the way lower, sinking 0.99% on the day after tech juggernaut Oracle (NYSE:ORCL) posted disappointing earnings. The S&P 500 Index managed to gain 0.20% ahead of tomorrow’s U.S. GDP report, while the Dow Jones Industrial Average was fairly flat, clinching a minor 0.03% gain on the day. Gold futures drifted around the $1,615 an ounce level while crude oil staged an impressive rally, gaining 1.8% for the day and settling just above $99 a barrel.
Disappointing earnings results from Oracle tipped the markets south in early trading as investors jumped ship from the U.S. tech sector. Selling pressures spread across the market as investors demonstrated their anxiety ahead of tomorrow's U.S. GDP report, which is largely expected to be a pivotal event before the holiday weekend. Overseas, the European Central Bank made a big effort to restore confidence by offering to loan $641 billion to 523 European banks over the next three years.
One of the best performers was the Utilities Select Sector SPDR (NYSEARCA:XLU), which gained a modest 1.49% on the day. This ETF climbed higher right from the opening bell as investors flocked to defensive, dividend-paying utilities amidst the uncertainty stemming from the tech sector. XLU was bolstered by safe haven demand and relatively high trading volumes as investors were prompted to reallocate capital to safer, current income-generating securities in lieu of seeking out riskier, more lucrative capital gains opportunities.
The S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) was one of the worst performers on the day, shedding 6.79% as the ECB made a huge stride forward in assuring liquidity for banks in the debt burdened currency bloc. Barry Knap, head of U.S. equity strategy at Barclays PLC, commented, “What the ECB is doing is just trying to prevent a disorderly deleveraging of European bank assets." Fear evaporated from the markets as investors digested the $641 billion loan program, although buying euphoria was laregly absent on both sides of the Atlantic.
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