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With a Rate Hike Likely, Mixed Economic Data Move SPY Slightly

Renee Blakely

SPY Falls Slightly on Mixed Sector Performance

Slight movement in SPY

The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P 500 Bull 3X ETF (SPXL) fell slightly on Wednesday, November 25, 2015, after the release of an array of economic data that turned out to be mixed.

The above graph presents the percentage changes in the market aspects on November 25 in response to macroeconomic events and domestic economic indicators.

Here, the US dollar is represented by the PowerShares DB US Dollar Bullish ETF (UUP), oil is represented by the United States Oil ETF (USO), and gold is represented by the SPDR Gold Shares ETF (GLD). The total bond market is represented by the Vanguard Total Bond Market ETF (BND) while volatility is represented by the Volatility S&P 500 (VIX).

Market overview

From the graph, we can see a slight drop in SPY as its falling component sectors just managed to cut down the gains of advancing sectors. USO gained on the day as prices of US crude rose 17 cents to $43.04 per barrel.

Improved durable goods orders and strong labor market conditions, owing to fall in jobless claims for the week ended November 21, 2015, led to a rise in the US dollar. The economic indicators were good enough to consider a rate hike possibility at the Federal Reserve’s December meeting.

Traders are anticipating 74% probability of the Fed’s raising the cost of borrowing. Also, rising expectations about quantitative easing in the Eurozone resulted in the fall of the euro against the US dollar.

The rising likelihood of the rate hike this year caused a rise in the prices of bonds. With high prices, bond yields fell. As market volatility fell on November 25, gold too lacked lustre. Both precious and industrial metals fell on the day due to the slack in commodity prices.

Mining companies’ stocks also fell on the day. Goldcorp (GG), Newmont Mining (NEM), Randgold Resources (GOLD), and Agnico Eagle Mines (AEM) fell 0.8%, 0.5%, 1.8%, and 0.04%, respectively, on November 25.

Let’s look at the performances of the component sectors of SPY for November 25, 2015.

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