Markets Get Short Relief, SPY and EWU Rise
Healthcare sector falls 0.71%
The graph below shows the performance of the component sector of the SPDR S&P 500 ETF (SPY) on September 3.
Mylan NV (MYL) had been volatile throughout the week and continued its downward trend since Monday August 31. The stock fell 2.47% on September 3. The healthcare company has bid for the hostile takeover of an Ireland-based company, Perrigo (PRGO). The deal has been approved by MYL shareholders, while Perrigo’s shareholders find the deal to be a “value destructive transaction.”
Other stocks at the bottom on September 3 were Joy Global (JOY) from the mining industry. The stock fell 14.60% on the day as the company reported a 37% drop in its profit for the quarter. Mining equipment manufacturers are affected by lower demand during this volatile period. JOY was joined by Netflix (NFLX) and Allegheny Technologies (ATI). The stocks yielded -4.15% and -3.77% on September 3.
US economy ahead
As we can see from the graph depicting the movement of the SPDR S&P 500 ETF (SPY) in part 1 of this series, the ETF has been rising subtly after its humble start on September 1. US investors had looked forward to the release of the employment report, which came out on Friday. The labor market in the US is said to be improving, and the overall economy is also growing, although at a slower rate. According to the report released by the ISM (Institute of Supply Management) on September 1, the PMI (Purchase Managers’ Index) for the US was 51.1 for the month of August which is above its threshold level of 50. It suggests that the manufacturing sector is growing slowly.
On September 3, we also saw a rise in oil and energy and a fall in gold. Oil is represented by the United States Oil Fund LP (USO), which rose 1.66%. The Energy Select Sector SPDR Fund (XLE) rose marginally on Thursday, September 3, by 0.28%, while the SPDR Gold Trust (GLD) fell by 0.72% on the same day. Gold seems to be losing investor favor since September 1. The above movements in the respective ETFs indicate that investors are gaining confidence, with oil rebounding and gold falling.
These movements, in conjunction with the rising US dollar, reflect the growing strength of the US economy. This is reflected by the 0.48% rise in the PowerShares DB US Dollar Bullish ETF (UUP) on September 3.
In the next part of the series, we’ll look at the UK stock market.
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