US Equity ETFs Rally Into The Second Quarter; GAZ Pops, VXX Tanks

[Chart courtesy of MarketWatch.com]

US stocks rallied Monday, extending last week’s advances, after better-than-expected latest domestic manufacturing data stretched Wall Street’s best first quarter since 1998.

The Dow climbed to its highest level since 2007 after the Institute of Supply Management’s index on manufacturing activity rose to 53.4 in March, slightly beating market expectations. The Federal Reserve kept buying debt to cap borrowing costs that would lead to an expanded balance sheet.

The Dow Jones Industrial Average (DJIA) jumped 52.45 points to 13,264.49 after manufacturing report for March showed prices rose lower than forecast, easing immediate inflation worries, while the S&P 500 Index (SPX) added 0.7 percent to 1418.90 with the commodities sector rallying the most.

The tech-laden NASDAQ Composite (COMP) rose 0.9 percent to 3119.70.

Yields on benchmark US ten-year notes dropped 0.03 percent to 2.19 percent after a report showed manufacturing activity in the 17-member Eurozone shrank further in March, boosting safe-haven appeal of US debts.

This euphoric rally has been a carbon copy of last year’s, as the Fed continues to front load the markets. For a more common sense analysis of this past quarter’s steep ascent, please see economist Dave Rosenberg’s words of wisdom in recapping the record quarter.

ETFs in the news:

The iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) continue to trade choppy, with an 11.32 percent jump today wiping off much of earlier losses. The instrument continues to trade at a high premium (price of shares higher than underlying asset) and investor discretion is advised.

Market Vectors Coal ETF (KOL) added 2.07 percent today, reflecting the overall strength of the Energy and mining equities today. As China manufacturing made a solid come back in March, these instruments also scored strong gains.

After witnessing a fluctuating fortune last week, iShares Silver Trust (SLV) climbed 2.14 percent today. SLV started the month strongly, moving up towards its 50-day moving average.

As US indices continue to notch higher levels, the fear-tracking iPath S&P 500 VIX Short Term Futures ETN (VXX) continues its downward journey, although an initial sharp drop gave way to a recovery; nevertheless, VXX hovers at its all-time low mark indicating total investor complacency.

Solar energy products go on suffering with Market Vectors Solar Energy ETF (KWT) losing 1.6 percent on the day. This is the funds fifth day of losses with shares now trading at January 2012 levels.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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