Major Market ETFs Slide Ahead Of Friday’s Jobs Data; UNG Shines, GAZ Tanks

[Chart courtesy of MarketWatch.com]

US stocks declined for the second day as investors took a cautious stance ahead of the US government’s monthly jobs report on Friday and digested mixed earnings reports. That should come as no surprise, as the jobs report is one of the most widely anticipated data points with market moving powers.

Investor sentiment got a boost in early trading after a report showed a decline in weekly jobless claims a day before the all-important April’s job reading. Treasuries changed little during the day’s trading to stay below the 2 percent mark for the longest stretch since January 19.

The Dow Jones Industrial Average (DJIA) slipped 61.98 points and the S&P 500 Index (SPX) shed 0.8 percent with energy leading the losers among its 10 major industry groups.

The tech-heavy NASDAQ Composite Index (COMP) lost 35.55 points to close at 3024.30 as markets turned choppy on conflicting economic news.

Treasury yields witnessed moderate swings after the Institute of Supply Management’s Service index showed in April services posted the slowest expansion of the year. Services sector is the biggest component of the US economy, and the ISM index includes financial services, health care, retail, construction and hotel industries.

The benchmark 10-year Treasury moved little at 1.93 percent after the ISM reading dropped to 53.5 percent in April from 56 percent in March. 10-year yield dropped to 1.90 percent Wednesday after ADB payroll data disappointed the market with lower-than-estimated job growth.

ETFs in the news:

Despite it being a bad day for energy ETFs, the United States Natural Gas Fund LP (UNG) jumped 3.4 percent for the day. The fund surged today after the weekly NG storage report showed natural gas supplies dropped unexpectedly in recent days, an unusual development for the last few months. UNG is down 37 percent since December despite climbing 11 percent in the last two weeks. The ETF invests the futures contracts and hence won’t track NG spot prices.

However, the premium-laden Barclays iPath Dow Jones-UBS Natural Gas ETN (GAZ) that also tracks NG futures tumbled 3.30 percent on the day, suggesting potential investor losses unrelated to NG’s price.

It was a bad day for gold-miner ETFs – the Market Vectors Gold Miners (GDX) fund lost 4 percent after bullion prices continued to slide. This fund has lost 20 percent in the past three months as investors remain worried over rising production costs.

As energy stocks retreated during the day, the US energy sector tracking State Street Energy Select Sector SPDR (XLE) tumbled 1.7 percent as crude prices slumped. XLE has returned only 1 percent for the year as the energy sector has come under pressure in recent months.

I will have the latest StatSheet including the updated momentum numbers and Trend Tracking Indexes (TTIs) posted within an hour or so.

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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