After a broad correction at the start of the month, the equities market and stock exchange traded funds have pared earlier losses and is finishing out October with a bang.
Over the past month, the Dow Jones Industrial Average rose 1.9%, the Nasdaq Composite increased 3.1% and he S&P 500 added 2.1%.
The best performing non-leveraged exchange traded products over the past month include Elements MLCX Grains Index ETN (NYSEArca: GRU) up 14.6%, Teucrium Corn Fund (NYSEArca: CORN) up 14.6% and iPath Dow Jones-UBS Grains Subindex Total Return ETN (NYSEArca: JJG) up 14.5%. [Overlooked Ratio Could be Signaling Upside for Corn ETF]
Soft commodities are strengthening off of multi-year lows, with grains prices now trading back above their short-term moving averages. After a bumper group year pressured prices, grains have been able to make a slight comeback over recent weeks on a slow U.S. harvest, a slowdown in sales and other coordination concerns.
However, many grain observers argue that the fundamentals point to continued weak prices ahead.
“Fundamentals remain bearish as the big crop keeps rolling in but it’s the charts and speculative money running the show,” CHS Hedging said in an Agrimoney article.
“The soybean fundamentals have not changed,” Another U.S. broker said in the article. “We are still looking at a record bean crop. Once this soymeal craze is over, we expect the bear market to resume.”
The worst performing non-leveraged ETFs over the past month include Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) down 22.2%, First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG) down 18.2% and Global X Gold Explorers ETF (NYSEArca: GLDX) down 18.0%.
The markets were stuck in sideways trading at the beginning of October as the Ebola scare and Hong Kong democracy demonstrations riled equities but improved growth and employment data helped pare loses.
The equities market began to feel the pressure after a warning from chipmaker Micron Technology (NasdaqGS: MU) triggered a sell-off in tech stocks.
As the broad market indices dipped below their long-term, 200-day moving averages, heavy selling swept across the markets, pushing equities even lower in what some were calling another Flash Crash. Fueling the sell-off in the U.S., weakness in European markets were beginning to spill over into the States.
However, stocks began to recover mid-month, following positive economic news, which revealed improved consumer sentiment and a recovering housing market, along with positive earnings results. Speculation that the European Central Bank would enact more aggressive monetary policies to help prop up its ailing economy also supported further gains.
At the end of the month, the broad markets jumped after the government revealed a solid economic expansion over the third quarter. The U.S. stock market was knocking on new all-time highs on the last day of the month after the Bank of Japan ramped up its stimulus measures and the country’s government pension fund began shifting out of bonds and into stocks. [Japan ETFs Find Double Support From BOJ, Pension Fund]
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Max Chen contributed to this article.