SPDR, DIA And QQQ Mixed As Jobless Claims Fall

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Major ETFs tracking U.S. markets struggled to find direction Thursday amid news that fewer people filed for unemployment benefits last week. That suggested that the labor market is improving after job creations climbed in July.

Jobless claims fell from 367,000 to 361,000 below consensus of 370,000 and well below the 385,000 to 390,000 seen before the start of annual auto shutdowns in early July.

"The clear decline since June provides some corroboration of the better-than-expected payrolls reading last week," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics of Valhalla, NY. "In short, it's encouraging data for the recovery."

Market Overview

In afternoon trade, theSPDR S&P 500 ( SPY ) lifted 0.09%.

SPDR Dow Jones Industrial Average ( DIA ) shed 0.02%.

PowerShares QQQ ( QQQ ), a basket of the largest 100 nonfinancial stocks on the Nasdaq, added 0.14%.

Guild Investment Management believes the market will continue rising in the short term, correct in September and then rally again between November and year's end, which is typical of election years.

"European, Asian, and U.S. stock markets will continue to gradually rally in price as it becomes more obvious that the U.S. Federal Reserve, European Central Bank and other central banks are providing liquidity to markets with the intention of seeing asset prices rise," Guild wrote in a client note. "It is no secret that they are trying to keep asset prices from falling into deflation and the world economies from falling into depression."

Last week, the Fed purchased repos for the first time since December 2008.

Guild wrote: "Since the Fed cannot buy stocks, it must put liquidity in the markets through other means, for example by performing repos with banks. Repos are repurchase agreements where the Fed loans money to banks and, in return, takes collateral from the banks. This provides liquidity to the banking system.

"The fact that loans are being made via repos to banks means:

A) One or more major banks are in trouble and need liquidity to avoid bankruptcy, or

B) The Fed is anxious to get money into banks' hands soon so banks can buy assets (stocks and bonds) to help the fight against those who favor deflation.

"In either case, more money is being added into the system, and that is bullish for stocks, non-U.S. currencies, and gold."

Natgas ETF Explosion

Among the biggest ETF gainers,United States Natural Gas ( UNG ) shot up 4.43%, rebounding from a brief pullback to its 50-day moving average. But it still trades below its longer-term, 200-day moving average, which could present overhead price resistance.

Natural gas is setting up for another possible sell-off, Waverly Advisors told clients in its daily note.

The increase in U.S. working natural gas inventories nearly half way through the 2012 injection season was the smallest in 12 years, the U.S. Energy Information Administration reported Wednesday. Natgas inventories are projected to rise by 1,477 billion cubic feet during the 2012 injection season -- the lowest since 1991, according to EIA's August Short-Term Energy Outlook.

"The slow start to the injection season reflects record-high inventories at the end of this winter, leaving less space to be filled, and a large increase in natural gas use by the U.S. electric sector for power generation," the EIA report stated.

But while the increase in inventories is low, the amount of total gas in underground storage facilities is at a record high for this time of year. Underground storage capacity is now about 75% full, a level not usually reached until late August or early September.

Follow Trang Ho on Twitter @TrangHoETFs .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: DIA , QQQ , SPY , UNG

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