Treasuries Approach 3-Month High; US Equity ETFs End Mixed

[Chart courtesy of MarketWatch.com]

US markets ended mixed Wednesday as investors compared mostly robust corporate earnings with a weaker-than-expected private sector jobs report.

Treasury 10-year yield coming close to the lowest level in nearly three months as European manufacturing contracted sharply in April and investors tried to second guess the US non-farm payrolls report due on Friday.

The ADP Employer Services report for non-farm jobs showed companies added 119,000 jobs in April, much lower than the median 170,000 forecast by economists surveyed by Bloomberg.  The latest figure is significantly lower than the 201,000 job-additions reported in March.

The Dow Jones Industrial Average (DJIA) shed 0.1 percent, while the S&P 500 Index (SPX) dropped 0.3 percent with the consumer discretionary sector fronting the gainers and the energy sector faring the worst among its 10 major industry groups

The tech-loaded NASDAQ Composite Index (COMP), however, climbed 0.3 percent after Flextronics (FLEX) and Garmin (GRMN) beat analysts’ earnings estimates.

Treasuries advanced overnight with yield on 10-year notes declining 2 basis points to 1.92 percent. The yield on the benchmark 10-year bonds had touched 1.88 percent in intraday trading on April 27, the lowest level since Feb 3.

ETFs in the news:

The First Trust Taiwan AlphaDEX (FTW) remained among the day’s top gainers, adding 1.14 percent on the day. The fund tracks the Defined Taiwan Index and invests in fundamentally strong value stocks from the S&P Taiwan BMI universe.

The iShares MSCI Emerging Markets Value Index Fund (EVAL) rose 2.86 percent as Asian markets closed higher earlier in the day. EVAL tracks the MSCI Emerging Markets Value Index and invests in value stocks across the Asia region.

Among the day’s losers, the United States Natural Gas Fund (UNG) tumbled 4.26 percent, as natural gas funds came under selling pressures following a three-day winning streak. Traders chose to book profit ahead of tomorrow’s natural gas inventory report.

The First Trust ISE-Revere Natural Gas Index Fund (FCG) tumbled 3.85 percent. The energy sector remained the day’s worst performer on the S&P 500 today while FCG invests 90 percent of its assets in an equity index called the ISE-Revere Natural Gas Index.

The wheat futures tracking Teucrium Wheat (WEAT) slumped 4.06 percent as commodities across the board retreated. This is a small cap fund and hence prone to wild swings. Stay away from this ETF is you don’t want to live on the edge with your investments.

It’s been a lot of aimless meandering during the first three trading days of the week, with data points indicating a crawling economy, which is certainly better than the economic contraction issues Europe faces. Upward momentum may get a boost, if Friday’s jobs numbers come in better than expected, although the odds are fairly slim in my opinion.

In the absence of something positive, we may see some pullback, which may very well gain speed depending on the outcome of this Sunday’s Greek and French elections.

About Ulli Niemann

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