In sum, investors spent Thursday trying to let the Fed taper sink in, which could lead to rising interest rates.
Overall, stocks moved on both sides of gains and losses. Bond markets, equally affected by less Fed bond buying, were also uncertain. The yield curve for bonds is moving from steep to a modestly flatter structure. Stocks and bonds were down sharply early Thursday but ended late in the day mostly flat given a late day (no surprise) rally. This condition has much to do with the Fed as it does with the start of earnings season and the Employment Report Friday.
Gaining sectors included Biotech (XBI), Healthcare (XLV), Financials (XLF), Utilities (XLU), Consumer Staples (XLP), Industrials (XLI), Transports (IYT), and Bonds (TLT). Declining sectors included Semiconductors (SOXX), Gold Miners (GDX), Natural Gas Stocks (FXG), Natural Gas (UNG), Base Metals Miners (XME), Coal (KOL), China (FXI), Brazil (EWZ), Emerging Markets (EEM) and Copper (JJC).
Jobless Claims fell due in part to prior data adjustments higher. The report showed 330K claims vs 304K expected, and prior claims rose from 339K to 345K. This is a common adjustment we almost always see and makes for bullish headlines. But, there are seasonal factors within the data, not the least of which was a short holiday week.
Friday is the big Unemployment Report for December. Most pundits anticipate a good number with 200K new jobs expected and the unemployment rate to remain unchanged. However, as most thoughtful people know, this report can be deceiving given either how many workers have given up looking for work or who have dropped from the rolls, in combination with a weak participation rate.
Today we featured a short video on iPaths Dow Jones UBS Copper ETN (JJC) from both weekly and daily chart perspectives.
Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume. This is a tool that investors can use to shorten their search for suitable ETFs, without being dominated by leveraged and/or inverse ETFs.
Chart of the Day features a look at the Van Eck China ETF (PEK). This issue has been around for some time now and had been linked “indirectly” to the Shanghai CSI 300 Index through an arrangement with Credit-Suisse created exposure. This relationship, for most of its existence, had created an unsatisfying premium for PEK. Now, PEK is directly tracking the index and thus eliminating (theoretically) the premium.
As you can see by the weekly chart below, PEK hasn’t perfor med well no matter the intermediary (note our proprietary and effective HI indicator from February 2013). But, at some point, this may be an attractive ETF allowing for direct investments to the premier index in China equity markets and ETF Digest subscribers may benefit as a result.
Volume was on the light side while breadth per the WSJ was mixed to negative.