It seems that yesterday’s rumors of strong China GDP growth were merely that, rumors. GDP sank to 8.1%, the weakest in three years, causing stocks to erase Thursday’s bull run as volatility spiked yet again, marking one of the more active weeks in recent memory. The Dow lost over 130 points while the S&P surrendered nearly 1.3%, all of this coming even after Google (GOOG), JPMorgan (JPM) and Wells Fargo (WFC) surpassed earnings expectations. While many investors had hoped for earnings season to be the main focus of the next few weeks, global issues concerning the euro debt crisis and now China’s lagging growth is creating a major cause for concern.
Gold was one of the hardest hit assets on the day, as it sank 25 points, creating a major opportunity for gold bugs around the world. Crude oil also suffered during the week-ending session, as a barrel of crude saw its price dip by 77 cents. Crude has been stuck in a range-bound rut for several weeks now, leading to a fair amount of speculation as to where the commodity will be headed next. With yet another unstable week to put in the books, Q2 is shaping up to fall well short of its predecessor and may crush investor optimism to boot.
One of the biggest ETF winners came from none other than the S&P 500 VIX Short-Term Futures ETN (VXX), which sank by more than 8% yesterday. Today, however, this ETN was able to jump by about 5.4% as markets gave in to major selling pressures. Roughly 6% of the S&P 500 has reported earnings thus far, with over 75% of them being positive, but that has not been enough to overcome fears of European yields and a slowing global economy. VXX will continue to prey on markets for as long as instability lasts so keep an eye on this fund in the coming weeks as it can be a vital trading instrument.
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One of the biggest ETF losers came from the Financial Select Sector SPDR (XLF), which sank by 2.3% on the day. XLF’s losses come as a frustrating result as JPM and WFC, both of whom beat the Street with their earnings, are among the top 10 holdings of the fund. Still, the massive sell-off in this ETF was likely due to euro fears, as banks and the financial sector as a whole are easily spooked by news concerning debt issues. XLF traded 92 million shares on the day and has a year-to-date performance of approximately 17%.
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Disclosure: No positions at time of writing.
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