Reversing much of the last 2-day rally, U.S. equities fell today as investors digested the latest economic data and commentary from the Fed. In today’s FOMC statement, the central bank said that they will continue purchasing $85 billion in bonds a month, though they indicated that this amount may increase or decrease depending on the health of the labor market and inflation. In other economic news, the Institute of Supply management reported slower manufacturing activity in April, while the Commerce Department’s report showed construction spending falling to a seven-month low in March [see What Can You Buy With Apple's Cash?].
Global Market Overview: Fed Takes More Flexible Stance, VXX Pops
Following today’s FOMC statement, all three major U.S. equity indexes declined to close in negative territory. The Dow Jones Industrial Average ETF (DIA, B) fell 0.86%, as its underlying index tumbled 138.85 points. The S&P 500 ETF (SPY, A) shed 0.88%, while the tech-heavy Nasdaq ETF (QQQ, A-) lost 0.47%.
In Europe, most markets were closed for the May Day holiday. Several Asian markets were also closed; Australia’s S&P ASX 200 lost 0.5%, while Japan’s Nikkei Stock Average slipped 0.4% after China’s official manufacturing PMI for April fell from 50.9 to 50.6 in April.
Bond ETF Roundup
U.S. Treasuries slowed slightly after the Fed indicated that it will take a more flexible stance on asset purchases Yields on 10-year notes fell 4 basis points, while 30-year bonds and 5-year note yields fell 5 and 3 basis points, respectively [see also Seven Simple & Cheap ETF Model Portfolios].
Crude oil futures traded lower today after the U.S. Energy Information Administration reported a spike in last week’s crude supplies; supplies rose by 6.7 million barrels. Gasoline and natural gas futures were also lower. Meanwhile, gold futures tumbled today, marking its biggest drop in two weeks following today’s monetary decision announcement.
ETF Chart Of The Day #1: (VXX)
The S&P 500 VIX Short-Term Futures ETN (VXX, B+) was one of the best performers today, gaining a whopping 4.22% during the session. As the CBOE Volatility Index (VIX) jumped above 14 following today’s economic reports and FOMC announcement, this ETF gapped slightly higher at the open. VXX rallied during the final hours of trading, eventually settling at $19.77 a share [see Baby Boomers ETFdb Portfolio].
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ETF Fun Fact Of The Day
The best-performing retirement strategy over the trailing 4-week period has been the Cheapskate Portfolio, which has gained 2.73%.
Disclosure: No positions at time of writing.
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