Major Market ETFs Slide On Services Data; JJG Surges, EWP Sinks

[Chart courtesy of MarketWatch.com]

The Major Market ETFs ended mostly lower Thursday as weak US services data combined with a coordinated interest rate cut by the European Central Bank and the People’s Bank of China subdued investors’ risk appetite.

Yields on US Treasuries dropped as investors rushed to buy safe-haven assets amid indications that the global recovery is faltering.

The Dow Jones Industrial Average (DJIA) slipped 0.4 percent, after sinking as much as 92 points during the today’s session. All but seven components within the 30-component index closed lower after the Institute for Supply Management’s non-manufacturing index dropped to 52.1 in June from 53.7 in May, the least since Jan. 2010 and still in the expansionary region.

The S&P 500 Index (SPX) trimmed 0.5 percent with consumer discretionary advancing the most even though June same-store sales mostly dropped while financials and energy declined the most among its 10 business sectors.

Despite positive ADP employment report showing US private-sector creating 176,000 jobs in June, a significant improvement over May, Treasuries advanced, pushing the benchmark 10-year yield down four basis points to 1.59 percent.

Yield on 30-year bonds dropped three basis points to 2.71 percent even though weekly jobless claims fell to 374,000, the least in six weeks and beating economists forecast of 385,000.

ETFs in the news:

The Barclays iPath DJ-UBS Grains TR Sub Index ETN (JJG) emerged one of the biggest gainers for the day, rallying 4.38 percent. The fund traded 316,000 shares against the daily average of 56,000 shares. The heat-wave sweeping across the country’s key grain producing areas is the reason behind today’s big movement. JJG is up a whopping 26.60 percent, year-to-date.

The current weather across the Midwest has had a devastating effect on many crops, pushing prices of agri-commodities higher. The Teucrium Corn Fund (CORN) also jumped 4.06 percent while the DB Agriculture Long ETN (AGF) vaulted 6.16 percent.

Europe related funds tanked today as investors remained wary after the ECB and the People’s Bank of China announced rate cuts and the Bank of England decided to extend its quantitative easing program by £50 billion, indicating a global economic slowdown.

The iShares MSCI Spain Index Fund (EWP) sank 4.83 percent as the Spanish IBEX 35 index tumbled 2.6 percent as ECB President Mario Draghi flagged a subdued loan environment, stating downside risks to growth remained. The iShares MSCI Italy Index Fund (EWI) also tanked, losing 4.73 percent for the day.

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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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