ETF Trends
ETF Trends

Strong corporate earnings and a lower U.S. dollar helped send stock exchange traded Funds (ETFs) sharply higher on Wednesday.

  • The euro jumped by the most since January on Wednesday as rising stocks and corporate earnings encouraged investors to shift out of the safe-haven dollar, and fueled a push of the Australian dollar to a new high. The U.S. dollar index, which measures the greenback’s movements against a basket of six major currencies, dropped to 74.384, down from 75.038 late Tuesday. The index is down 5.9% so far in 2011. The Euro set a new 15-month high at $1.4547, more than reversing the loss attributed earlier this week to fears of a potential restructuring of Greek debt. Any signs of better growth prospects recently had aided the Euro by heightening expectations that the European Central Bank will raise interest rates again. That’s in stark contrast to the outlook for the U.S. Federal Reserve, the Bank of Japan, or even the Bank of England because of other considerations in those countries. The SPDR Euro Stoxx 50 Index ETF (NYSEArca: FEZ) finished 3.2% higher on Wednesday.
  • Gold and silver prices rose Thursday as investors continued to worry about inflation and how the United States and Europe will deal with their ongoing financial problems. Gold settled at $1,498.90 an ounce, its seventh consecutive day of gains. Silver settled at $44.461 an ounce, its sixth straight gain. Other metals and energy prices were mostly higher while grains and beans were mixed. Precious metals attract investors during uncertain economic times because of their reputation as relatively stable assets. Investors still are uneasy after Standard & Poor’s said Monday it could lower its rating on U.S. government debt unless Washington is able to control its budget deficit, which is projected to be about $1.5 trillion this year. Other issues include the impact that inflation may have on the global economy and Europe’s efforts to solve financial problems in Portugal and other countries. The PowerShares DB Gold Double Long ETN (NYSEArca: DGP) closed almost 1% higher on Wednesday.
  • Oil settled above $111 a barrel Wednesday as the dollar weakened and the government reported an unexpected drop in U.S. crude supplies. Gas pump prices also edged higher to $3.84 for a gallon of regular. The surge in oil had cooled recently as industry groups monitored the effect of higher prices on petroleum demand and the global economy. The International Energy Agency, OPEC and others have said that they see signs that consumers are using less fuel as prices rise. In the U.S., retail surveys by MasterCard SpendingPulse indicate that motorists have cut back on gasoline purchases for the past seven weeks. Oil rose Wednesday as the dollar lost ground to the euro, the British pound and other major currencies. The dollar has been sliding since Standard & Poor’s downgraded its outlook for U.S. debt earlier this week. Oil, which is priced in dollars, tends to rise as the dollar falls. The ProShares Ultra DJ-UBS Crude Oil ETF (NYSEArca: UCO) rose more than 6%.

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.