Investing.com Weekly Wrap-Up 18 October 2013

October 18th, 2013
in contributors, syndication

by Investing.com Staff, Investing.com

U.S. stocks gain on Fed expectations, earnings; Dow rises 0.18%

U.S. stocks rose on Friday after investors cheered better-than-expected earnings, while expectations for the Federal Reserve to continue stimulating the economy to investing.com-logooffset any damage inflicted on recovery the shutdown may have caused also boosted share prices.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.18%, the S&P 500 index rose 0.65%, while the Nasdaq Composite index rose 1.32%.

Follow up:

Stock price rose on expectations that the Fed may delay plans to taper its stimulus program until early 2014.

The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, boosting stocks in the process.

Prior to the D.C. deadlock, markets were expecting the Fed to begin tapering the pace of its asset purchases in late October or early December, though many investors have pushed back estimates for a start date to early 2014, possibly after current Fed Chair Ben Bernanke steps down on Jan. 31.

Separately, investors went long on risk-on asset classes after official data showed that China's gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.

The data eased concerns over the strength of the recovery in the world's second-largest economy.

Elsewhere, Internet bellwether Google saw its stock move above USD1,000 per share in Friday trading due to better-than-expected earnings.

General Electric, restaurant chain Chipotle Mexican Grill and Morgan Stanley released earnings that drew applause on Wall Street as well.

Leading Dow Jones Industrial Average performers included General Electric, up 3.65%, Verizon, up 2.25%, and Nike, up 1.82%.

The Dow Jones Industrial Average's worst performers included UnitedHealth, down 3.70%, Home Depot down 1.39%, and Merck, down 1.08%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.56%, France's CAC 40 rose 1.09%, while Germany's DAX 30 rose 0.60%. Meanwhile, in the U.K. the FTSE 100 finished up 0.71%.

Forex

The dollar remained broadly lower against the other major currencies on Friday, as concerns over the consequences of the two-week U.S. government shutdown sparked speculation that the Federal may not scale back its bond purchases in the near future.

The dollar traded lower against the yen on Friday on fears the recent budget impasse may prompt the Federal Reserve to continue stimulating the economy for longer than once anticipated, though bottom fishers brought the greenback up from earlier lows.

In U.S. trading on Friday, USD/JPY was trading at 97.88, down 0.04%, up from a session low of 97.56 and off a high of 98.16.

The pair was likely to find support at 96.57, the low from Oct. 7, and resistance at 99.00, Thursday's high.

While markets breathed a sigh of relief after the U.S. Congress passed legislation to reopen the government and raise the debt ceiling this week, concerns continued to persist that the Federal Reserve may delay plans to taper its stimulus program until early 2014.

The euro was steady against the dollar, with EUR/USD inching up 0.04% to 1.3682. The dollar was lower against the pound, with GBP/USD up 0.14% to 1.6185, and steady against the Swiss franc, with USD/CHF easing up 0.02% to hit 0.9026.

Elsewhere, the greenback was broadly lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD gaining 0.37% to 0.9669, NZD/USD edging 0.12% higher to trade at 0.8496 and USD/CADdown 0.10% to 1.0284.

Reserve Bank of Australia Governor Glenn Stevens said in a speech earlier that good progress has been made, but there remains a lot of work to do be made to make sure that post-global financial crisis reforms are implemented.

Separately, the export-related currencies found support after official data showed China gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.

The data eased concerns over the strength of the recovery in the world's second-largest economy.

A separate report showed that industrial production in China rose by an annualized rate of 10.2% in September, exceeding expectations for a 10.1% increase, after a 10.4% rise the previous month.

In Canada, official data showed that core consumer price inflation remained unchanged at 1.3% in September, confounding expectations for a downtick to 1%.

Consumer price inflation, including the eight most volatile items, rose to 0.2% last month, from a flat reading in August, compared to expectations for a rise to 0.1%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.06% to 79.68.

Gold

Gold prices moved lower but remained firm on expectations for the Federal Reserve to keep asset-purchasing programs in place to offset any drag a recent fiscal showdown that closed the government and nearly threw the country into default may have on recovery.

Stimulus tools often weaken the dollar to drive recovery, making gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,315.30 during U.S. afternoon hours, down 0.58%.

Gold prices hit a session low of USD1,313.40 a troy ounce and high of USD1,325.90 a troy ounce.

Gold futures were likely to find support at USD1,251.10 a troy ounce, Tuesday's low, and resistance at USD1,324.10, Thursday's high.

The December contract settled up 3.17% at USD1,323.00 a troy ounce on Thursday.

Elsewhere on the Comex, silver for December delivery was down 0.27% at USD21.888 a troy ounce, while copper for December delivery was up 0.07% and trading at USD3.299 a pound.

Oil

Oil prices jumped up on Friday after China's quarterly gross domestic product figure met market expectations and boosted hopes for demand in the world's second-largest economy to remain firm.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD101.04 a barrel during U.S. trading, up 0.37%.

The commodity hit a session low of USD100.53 and a high of USD101.70. The November contract settled down 1.58% at USD100.67 a barrel on Thursday.

Oil futures were likely to find support at USD100.06 a barrel, Thursday's low, and resistance at USD102.95 a barrel, Wednesday's high.

Official data showed that China's gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.

The data eased concerns over the strength of the recovery in the world's second-largest economy, which boosted oil prices.

Oil also support on expectations for the Federal Reserve to keep its monthly USD85 billion bond-buying program in place into 2014 to offset any effects the recent fiscal showdown may have on recovery.

Stimulus programs tend to weaken the dollar, which makes crude a nicely priced commodity on dollar-denominated exchanges.

The Federal Reserve has also said it will pay close attention to data before deciding on the fate of stimulus programs, though the government shutdown halted the flow of indicators for two weeks.

Meanwhile on the ICE Futures Exchange, Brent oil futures for November delivery were up 0.51% at USD109.67 a barrel, up USD8.63 from its U.S. counterpart.

Natural Gas

Natural gas prices fell on Friday amid concerns mild weather may have hampered demand over the past two weeks and left the country's stockpiles high.

A government shutdown left markets without weekly supply data, prompting investors to sell and await fresh market-moving data, though concerns persisted that the next report due out next week will be bearish.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.697 per million British thermal units during U.S. trading, down 1.61%.

The commodity hit a session low of USD3.685 and a high of USD3.767.

The November contract settled down 0.32% at USD3.757 per million British thermal units on Thursday.

Futures were likely to find support at USD3.482 per million British thermal units, the low from Oct. 4, and resistance at USD3.869, Wednesday's high.

Updated weather models continued to call for below-normal temperatures to hover over portions of the central and eastern U.S. in late October, though chilly forecasts were already priced into trading.

Concerns fall's mild temperatures have crimped demand sent prices falling.

Demand for natural gas tends to fall at the country's thermal power plants as temperatures moderate, as homes and businesses rely less on heating or air conditioning.

The U.S. Energy Information Administration halted the release of its weekly natural gas inventory data due to the U.S. government shutdown.

Next week, the government will release two reports, with data for the week ending Oct. 11 publishing on Oct. 22, and data for the week ending Oct. 18 hitting the wire on Oct. 24 as normal.

Fears mild weather will show healthy inventory levels sent prices falling on Friday.

Total U.S. natural gas storage stood at 3.577 trillion cubic feet as Oct. 4, 3.7% below last year's unusually high level but 1.6% above the five-year average for this time of year.

Demand for natural gas tends to rise at the country's thermal power plants as temperatures fall, as homes and businesses throttle up on their heaters.

Hot or cold temperatures tend to boost demand for the commodity.

Natural gas accounts for about a quarter of U.S. electricity generation.















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