Exchange traded funds (ETFs) trimmed earlier losses as the Federal Reserve offered upbeat comments on the U.S. economy; but major indexes remained in the red as Japan continued to struggle with nuclear and natural disasters. The Dow Jones Industrial Average finished down 1.2%.
- Federal Reserve policymakers kept ultra-low interest rates and stimulus spending in place Tuesday amid global crises in the Middle East and Japan and on high but falling unemployment at home. The Fed held rates at historic lows and stuck to a $600 billion stimulus plan in an effort to spur growth, as it pondered events in the Arab world that have pushed up oil prices and a developing nuclear crisis in quake-hit Japan. “The economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually,” the Federal Open Market Committee said in a statement. The Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF) rose 4.55% today.
- Asian shares tumbled Tuesday as Tokyo’s stock benchmark plunged 10.6% on selling amid worries a possible nuclear catastrophe would further complicate and endanger the nation’s recovery from its worst-ever earthquake on record. The Nikkei Stock Average finished 10.6% lower at 8,605.15 after sliding more than 14% earlier in the day, pressured by news of explosions at Fukushima Daiichi nuclear power plant’s No. 2 and No. 4 reactors, on top of previous blasts at the No. 1 and No. 3 reactors. Coming on top of a 6.2% fall Monday, the performance is the Nikkei’s worst since its Oct. 16, 2008, drop of 11.4%, in the aftermath of the global financial crisis. The iShares MSCI Japan Index ETF (NYSEArca: EWJ) finished the day flat.
- Gold futures fell to their lowest level in nearly four weeks as most major assets — except for the U.S. dollar — were seeing red after the nuclear crisis in Japan deepened. Gold fell as stock markets from the U.S. to countries in Asia and Europe suffered heavy losses as a new blast and fire rocked a Japanese nuclear plant, where workers were already trying to avert a meltdown. The day’s broad market slump is due to “liquidation of any risk asset, and when it comes to metals, that also takes away Asian buying, a very important component” of the trade, said Bill O’Neill, a principal with Logic Advisors in New Jersey. The Market Vectors Gold Miners ETF (NYSEArca: GDX) was down over 2% on Tuesday.
- Oil futures settled lower Tuesday, their largest one-day drop since October, as Japan struggled to contain radiation from damaged reactors and most major assets traded lower. That was oil’s lowest settlement since Feb. 28 and its largest one-day percentage drop since Oct. 19. Japan is the world’s No. 2 oil importer after the U.S. and the third largest oil consumer after the U.S. and China. Oil and other energy futures added to losses after the U.S. Federal Reserve kept its key interest rates the same and vowed to continue its bond buying program, even as it described the economy as in firmer footing. To add to the day’s misery, the International Energy Agency reported oil supplies rose to a record in February and it warned sustained high prices could dent the world economy. The ProShares UltraShort DJ-UBS Crude Oil ETF (NYSEArca: SCO) gained almost 7.5% on Tuesday.
Gregory A. Clay contributed to this article
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.