SPY up 1.4%
The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P 500 Bull 3X ETF (SPXL) bounced back by 1.4% and 4.1%, respectively, on Tuesday, January 26. The rebound in oil prices boosted US equities on the day. Recently, oil prices have been steering the market movements. In addition, earnings results were upbeat on Tuesday, which bolstered the upward trend of the SPY.
The above graph presents a market snapshot on January 26, 2016. Here the US dollar is represented by the PowerShares DB US Dollar Bullish ETF (UUP), oil is represented by the United States Oil Fund (USO), and gold is represented by the SPDR Gold Trust (GLD). The Treasury bond market is represented by the iShares 20+ Year Treasury Bond (TLT) while volatility is represented by the Volatility S&P 500 (VIX).
The rebound in USO was more than 8% on Tuesday. US crude rose 6.5% to settle at $32.30 per barrel while Brent crude went up 7% and closed at $32.64 per barrel. The rise in oil prices lifted oil and gas stocks. QEP Resources (QEP) and Range Resources (RRC) rose 12.2% and 10.0%, respectively, on January 26. Williams (WMB), which is involved in oil and gas pipelines, storage, and transportation, rose 11.5% on the day. These stocks were the top three performers in SPY for the day. Strong upward movement in risk assets like US equities decreased market volatility. Thus, investors’ demand for safe havens like gold and Treasury bonds fell on Tuesday. Yields went up with the drop in bond prices.
In the next article, we’ll look at the performance of the SPY in detail.