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ETF News And Commentary

Eric Dutram

ETF Trading Report: Base Metal, Tech ETFs In Focus

RYT DBB

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U.S. equity markets had a decent session during Tuesday trading although the Nasdaq did finish the day in the red. However, with Apple’s strong beat after the bell this looks to be easily reversed once trading starts on Wednesday morning. The tech giant easily crushed earnings once again, selling over 35 million iPhones in the quarter, a near 100% increase from the year ago period.

Beyond Apple after the bell, investors also saw a decent level of strength in the telecom space, GE, and a few of the industrial goods manufacturers, rounding out a solid session. Additionally, commodity prices broadly rose across the board, led by gains in softs, copper, and moves higher in the precious metal market as well. However, cattle did see some weakness on a report of mad cow disease in California as prices for live cattle slumped by 2.6% on the day.

Nevertheless, thanks to the optimism in the markets and the desire for risky assets like commodities, Treasury bond rates rose marginally on the day. The benchmark 10 Year added about four basis points to finish at the 1.97% mark, although this figure is still depressed from month ago levels (read Play a Recovery With These Consumer ETFs).

In ETF trading, investors again saw moderate to light trading volumes in a variety of products. Major U.S. equity funds experienced volumes in line with their averages while energy and precious metal focused ETFs saw sharply lower volumes yet again in Tuesday’s session.

However, a few funds did manage to see outsized trading nonetheless, including several European funds, some of the consumer ETFs, and a selection of emerging market products. In particular, investors saw outsized volume in the Guggenheim S&P Equal Weight Technology ETF (RYT - ETF report) which saw a spike in trading to 289,000 shares from the usual 30,900.

This jump was likely due to the slew of earnings reports which have hit or were about to be released onto the market in this important sector. Furthermore, since the fund employs an equal weight methodology, a few big names don’t dominate the fund, ensuring that the product is a broad sector play on the segment (see Three Technology ETFs Outperforming XLK).

Given the dominance of Apple in many tech ETFs, RYT was likely a great choice for those looking to make a broad bet on the sector ahead of some key reports which could greatly influence some of the small caps in the space. Although the fund was down about 0.7% on the day, we could see a move sharply higher in Wednesday trading if the Apple results filter over into the rest of the market.

While many commodity products saw light trading once again, investors did see a spike in trading for the PowerShares DB Base Metals Fund (DBB - ETF report). This popular note saw a huge increase in volume with over 1.1 million shares changing hands, well above the 163,000 that investors usually see in a day (read Hard Times In Soft Commodity ETFs).

Today’s jump came as traders scooped up a variety of base metals in the futures market as copper rose by 4.7 cents a pound to the $3.68 mark. Meanwhile, zinc and aluminum, the other two components of the ETN, also saw decent moves higher on the day as investors once again took on risky assets. Thanks to this, DBB added about 0.6% for the session, helping the note to bounce off of its recent lows.

(See more on ETFs at the Zacks ETF Center)

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