Rally Carries ETFs Along in Rising Tide

Stocks surged Monday, as traders were buoyed by global assurances that stimulus policies will remain in place for now. The benchmark Dow Jones Industrial Average blew past its 52-week high, and the broad rally carried most conventional exchange-traded funds upward.

The Dow closed up 204 points, or more than 2%, to finish the day at 10,227, surpassing its prior 52-week intraday high of 10,158 reached on Oct. 21. The Nasdaq rose 42 to 2154, and the S&P 500 climbed 24 to 1093.

Over the weekend, G-20 finance ministers and central-bank chiefs discussed the fragility of the global economic recovery, agreed that stimulative efforts should continue and approved a timetable for agreeing on policies to help rebalance the global economy.

The finance ministers didn't mention currencies, which "has given fresh ammunition to the carry trade and the dollar funding of pro-risk strategies," according to Ken Broux, an economist at Lloyds TSB Corporate Markets.

Crude oil futures rose, buoyed by concerns that Hurricane Ida could disrupt oil and gas output in the Gulf of Mexico. Prices were also helped by the weak dollar, which approached its lowest levels in recent weeks against a basket of currencies and firm equities. As of 4:02 p.m., the front-month December contract on the New York Mercantile Exchange was trading $1.85 higher at $79.28 a barrel.

For a detailed rundown on Monday’s trading session see our market story. 

Emerging markets carried the day as the link between government stimulus and economic recovery was reaffirmed in the G-20 meeting. The SPDR S&P Emerging Europe fund (GUR) rose 5.9%. The outlook for low interest rates also helped the iShares Cohen & Steers Realty Majors Index fund (ICF), which rose 5.4%.

A big market swing was a big hit for the iPath Exchange Traded Notes S&P 500 VIX Short-Term Futures Index fund (VXX), which lost 6.0%. Betting against the market was the wrong move Monday, as the Short S&P 500 ProShares fund (SH) dropped 2.3%, a less severe hit than leveraged short-bias funds.

Data Point
State Street Global Advisors said in its October Exchange Traded Fund snapshot that assets in the U.S. ETF industry declined by $5.3 billion, an 0.8% drop for the month. As of Oct. 30, there was about $689 billion invested in 779 ETFs run by 29 managers. Investments in fixed-income funds climbed to nearly $94 billion, a gain of 3.3% for the month. International ETFs are now the largest single category with $166 billion. The S&P 500 fell about 1.9% in October and the MSCI EAFE gained 1.2%.

Earnings and Conference Calls
ACME Communications, Advanced Life Sciences, Air Transport Services Group, AirMedia Group, Akorn, Anthracite Capital, ArvinMeritor, Astea International, Atmos Energy, Baytex EnergyTrust, Beazer Homes USA, Bitstream, Bob Evans Farms, Cardiogenesis, CGGVeritas, China Digital TV Holding, China Yuchai International, Consolidated Water, CPFL Energia, CPI Aerostructures, Dawson Geophysical, Emdeon, Epicept, FirstCity Financial, Fossil, Franklin Covey, GeoEye, Glowpoint, Green Plains Renewable Energy, Gulf Resources, Harbin Electric, HearUsa, Henan Zhongpin Food Share, Hewitt Associates, Intelli-Check, Intertape Polymer Group, INX, JA Solar Holdings, Javelin Pharmaceuticals, Maidenform Brands, MI Developments, Onvia.com, Orbit International, Pan American Silver, Paragon Shipping, Perceptron, Provident Energy Trust, Ralcorp Holdings, Randgold Resources, Relm Wireless, RHI Entertainment, ShengdaTech, Supreme Industries, Synthetech, Systemax, Tandy Brands, The Hackett Group, Thomas Group, Tier Technologies, Top Image, Trailer Bridge, Ultrapetrol Bahamas, Universal Power Group, Vaalco Energy, Vodafone Group, Vought Aircraft Industries, Wells-Gardner Electronics

Economic Data
7:45 a.m. ICSC-Goldman Store Sales
8:55 a.m. Redbook