Courtesy of John Nyaradi.
Events in Europe spooked markets out today despite improved initial jobless claims numbers and a flat GDP report.
Major markets and index ETFs were mixed today as the S&P 500 declined .16% and the SPDR S&P 500 ETF (NYSEARCA:SPY) declined .15%; the Dow Jones Industrial Average increased .15% while the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) increased .11%; the Nasdaq 100 Composite lost .31% while the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) lost .38%; and the Russell 2000 Index lost .27% while the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .35%.
Although we saw a rallying cry from the Dow later on in the day today, markets and index ETFs were generally spooked out by the events in Europe. Europe is back at it again, and this time the culprit is Spain, whose Unions ordered a strike today in protest of austerity measures set to pass through the government soon. The only problem with this picture besides all of the other problems with Europe, is that if Spain goes down, so goes the Euro, and so goes everyone else. I hate to be so cynical, but if Greece could not default, Spain certainly cannot default either.
Despite all of the issues overseas however, US markets and the US economic recovery is still partially oblivious, as initial jobless claims have continued to decrease and today’s revised 4th Quarter GDP report remained unchanged. The unchanged GDP report was a bit of a bummer however the continued downward trend in jobless claims is very good. My only fear is that if Europe cannot tame itself enough so as to not wreck havoc on our small economic recovery. Furthermore, US markets only declined less than .20% on average today to the Spanish news, so either investors feel America is at least shielded from European problems for now or Europe is not in that large of trouble, I agree with neither point.
The oil bubble is also perhaps starting to hiss, as the United States Oil Fund LP ETF (NYSEARCA:USO) lost over 2% while the United States Natural Gas Fund LP ETF (NYSEARCA:UNG) lost over 5% today. Whenever you have France, Great Britain, and The United States discussing the need to open up emergency reserves to ease gas prices, one can almost always bet that the current oil bubble might pop. Throw in the Saudi sentiment to produce more oil to offset Iran embargoes, and we have a whole new party where supply will likely come into control very soon, unless of course Iran decides to go further rogue.
Bottom Line: Markets continue to lay flat and barely responded today to improved initial jobless claims numbers; Europe seems to be the only event right now that stirs US markets up. At any rate, a correction is bound to happen sometime and Europe has to “fix” their ordeal one way or another. Hopefully US markets can remain shielded from the potential explosion.
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