SPY closed 0.07% lower
The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P 500 Bull 3X ETF (SPXL) fell by 0.07% and 0.33%, respectively, on Tuesday, November 17, 2015. US equities, which had traded in positive territory in early sessions, turned mixed and ended down after the news of suspected terrorist activity in Germany broke. A soccer match between Germany and the Netherlands was cancelled due to suspected terror threats, and the stadium was evacuated. The incident created a mixed reaction in the US stock market, and SPY closed down on the day.
The above graph presents the market overview based on the economic data releases of the day, as well as the perception of investors toward current geopolitical risks.
The US dollar is represented by the PowerShares DB US Dollar Bullish ETF (UUP), oil is represented by the United States Oil Fund ETF (USO), and gold is represented by the SPDR Gold Trust ETF (GLD). The total bond market is represented by the Vanguard Total Bond Market ETF (BND), and volatility is represented by the Volatility S&P 500 Index.
SPY and SPXL dropped as equities ended on a mixed note. The dollar continued its uptrend as investors turned to safer currencies in times of geopolitical instability. Other factors were behind the strengthening dollar. November 17 saw the release of the Consumer Price Index (or CPI) by the US government, which rose by 0.2% for October 2015. This was in line with the forecasted value.
The core CPI was also up by 0.2%, and both indexes met expectations. The economic indicator, although not equal to the Fed’s inflation target, is still strong and will be considered in the rate hike decision during December’s meeting. The weakening of the euro against the dollar ahead of the anticipated quantitative easing by the European Central Bank also contributed to the dollar’s strengthening on November 17.
The strong US dollar also led to falling commodities like oil and gold. Due to falling oil prices, energy stocks Chesapeake Energy (CHK), Cabot Oil & Gas (COG), and Southwestern Energy (SWN) fell 7.4%, 6.9%, and 6.3%, respectively, on November 17.
In the next article, let’s look at the sector performances of the SPDR S&P 500 ETF (SPY) on the day.