Upward Momentum Slows But Equities Eke Out A Gain On Tech Earnings; USO Pops, VIXY Drops

[Chart courtesy of MarketWatch.com]

Equities managed to close higher for the third consecutive day as good tech earnings lifted investor mood in an otherwise murky day overshadowed by disappointing economic readings.

Investor sentiment also strengthened after Germany’s Bundestag voted in favor of a €100 billion bailout package for Spain meant to recapitalize Madrid’s stricken banks.

The Dow Jones Industrial Average (DJIA) rose 35 points with 15 of the 30 stocks in the index ending higher for the day.  The S&P 500 Index (SPX) added 4 points with tech stocks front-running the day’s gainers while telecom and financials lagged among its 10 business groups.

Treasuries retreated after data released for leading economic indicators fell short of expectations, giving rise to speculations that the Federal Reserve will initiate quantitative easing 3 very soon to prop up the sputtering economy. At least that’s how the ever hopeful crowd on Wall Street views this data.

The benchmark 10-year yield bounced off near-record lows as Treasuries retreated after leading economic numbers indicated the recovery is stalling. The 10-year yield rose two basis points to 1.51 percent after a report from the National Association of Realtors showed existing home sales slumped 5.4 percent in June.

A Labor Department report showed unemployment benefit claims jumped 34,000 to 386,000 in the week ended July 14 against a forecast of 365,000, pushing up yield on 30-year bonds by two basis points to 2.61 percent in late afternoon trading, New York time.

ETFs in the news:

As commodities advanced and crude oil futures surged today, with the United States Oil Fund (USO) leaping 2.82 percent. Other crude-linked funds like the iPath Exchange Traded Notes S&P GSCI Crude Oil Total Return Index Medium-Term Notes Series-A (OIL) and the PowerShares DB Oil Fund (DBO) also gapped higher, adding 2.95 percent and 1.76 percent, respectively.

As tech stocks sizzled, tech-related funds soared. The Invesco PowerShares Nasdaq Internet Portfolio (PNQI) vaulted 2.35 percent after stocks of eBay Inc jumped more than 9 percent as revenue and profits for the online auctioneer topped analysts’ estimates.

As market volatility cooled following positive developments in Europe and strong US corporate earnings data, the fear-tracking Volatility Index (VIX) sank 4.39 percent on the day. The ProShares VIX Short-Term Futures ETF (VIXY) also marched south despite gaining in early trade and settled 2.49 percent lower over Wednesday.

For the latest momentum numbers and Trend Tracking Indexes (TTIs), please see the most recent StatSheet, which I will post within the next couple of hours.

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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