Investing.com Weekly Wrap-Up 08 November 2013

November 8th, 2013
in contributors, syndication

by Investing.com Staff, Investing.com

U.S. stocks gain on advancing jobs report; Dow up 0.98%

U.S. stocks applauded a better-than-expected October jobs report and rose on Friday amid hopes a more buoyant economy will improve business for American investing.com-logocompanies over the long run.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.98%, the S&P 500 index rose 1.34%, while the Nasdaq Composite index rose 1.60%.

Follow up:

The Bureau of Labor Statistics reported earlier that the U.S. economy added 204,000 jobs in October, far surpassing expectations for a 125,000 increase.

The August figure was revised to 238,000 from 193,000, while the September figure was revised to 163,000 from 148,000. 

The U.S. unemployment rate ticked up to 7.3% last month from 7.2% in September, in line with expectations. 

The robust data depicted an improving economy, which drew applause on Wall Street, and also  rekindled expectations that the Federal Reserve could announce plans to scale back its USD85 billion-a-month stimulus program soon.

Stimulus programs aim to drive recovery by depressing borrowing costs, boosting stocks in the process, and talk of their dismantling can deflate share prices namely by fueling uncertainty over how equities will perform without a monetary crutch.

Stocks rose, however, as investors digested the data and determined the Fed will continue stimulating the economy likely into 2014, as the labor force participation rate remains soft while fewer high-quality jobs are being created when compared to retail, leisure and hospitality jobs.

Stocks also rose on sentiment that the Federal Reserve may opt to wait to announce plans to begin tapering asset purchases at its March meeting, when Janet Yellen takes control of the U.S. central bank.

Elsewhere, the Thomson Reuters/University of Michigan's preliminary consumer sentiment index for November ticked down to 72.0 from 73.2 in October, disappointing expectations for a rise to 74.5.

Leading Dow Jones Industrial Average performers included JPMorgan Chase, up 4.46%, Goldman Sachs, up 2.22%, and Merck, up 2.17%.

The Dow Jones Industrial Average's worst performers included Home Depot, down 0.31%, McDonald's, down 0.20%, and IBM, which was up 0.04%.

European indices, meanwhile, finished largely lower.

After the close of European trade, the EURO STOXX 50 fell 0.33%, France's CAC 40 fell 0.48%, while Germany's DAX 30 fell 0.03%. Meanwhile, in the U.K. the FTSE 100 finished up 0.17%.

Forex

The dollar shot up on Friday after official data revealed the U.S. economy added more jobs than expected in October, though profit taking trimmed some of the greenback's earlier gains.

In U.S. trading on Friday, EUR/USD was down 0.48% at 1.3354.

The much better than expected report from the Bureau of Labor Statistics for added jobs was strong support for the dollar.

The strong employment figures fueled speculation that the Federal Reserve could announce plans to scale back its USD85 billion in monthly asset purchases possibly as soon as December.

Asset purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process, and talk of their dismantling strengthens the U.S. currency.

The better-than-expected October jobs report came a day after official data showed that the U.S. economy grew 2.8% on year in the third quarter, well beyond expectations for 2.0% growth. 

Capping the dollar's advance, however, was the Thomson Reuters/University of Michigan's preliminary consumer sentiment index for November, which ticked down to 72.0 from 73.2 in October, disappointing expectations for a rise to 74.5, which allowed for profit taking.

The euro, meanwhile, continued to come under pressure against the dollar after the European Central Bank on Thursday trimmed its benchmark interest rate to a record-low 0.25% from 0.5% in an unexpected decision.

Elsewhere, official data revealed that Germany's trade surplus widened to EUR18.8 billion in September, from EUR15.8 billion the previous month, which was revised up from EUR15.6 billion. 

Analysts had expected the trade surplus to narrow to EUR15.5 billion in September.

The wider surplus, the product of soft imports, watered down the euro by stoking concerns Europe's largest economy is shipping in less inputs due to soft demand for its goods and services elsewhere in the continent. 

Separately, Standard & Poor's cut France's credit rating to AA from AA+. The ratings agency said slower growth will constrain the government's ability to improve public finances.

The greenback was up against the pound, with GBP/USD down 0.62% at 1.5997.

The dollar was up against the yen, with USD/JPY up 1.02% at 99.09, and up against the Swiss franc, with USD/CHF up 0.74% at 0.9224.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.29% at 1.0489, AUD/USD down 0.80% at 0.9378 and NZD/USD trading down 0.99% at 0.8242.

In Canada, official data showed that the Canadian economy added 13,200 jobs in October, disappointing expectations for a 14,000 increase after a 11,900 rise the previous month. 

Canada's unemployment rate remained unchanged at 6.9% last month, confounding expectations for an uptick to 7.0%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.59% at 81.39.

Gold

Gold prices dropped on Friday after data revealed the U.S. economy picked up more jobs than expected in October, which fueled heavy dollar demand that sparked a selloff in gold markets.

Gold and the dollar trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,284.70 during U.S. afternoon hours, down 1.82%.

Gold prices hit a session low of USD1,280.70 a troy ounce and high of USD1,313.30 a troy ounce.

Gold futures were likely to find support at USD1,251.10 a troy ounce, the low from Oct. 15, and resistance at USD1,325.70, Thursday's high.

The December contract settled down 0.71% at USD1,308.50 a troy ounce on Thursday.

Positive news from the U.S. (employment and GDP) gave hope that the economy there might strengthen in coming months.  As a rsult the dollar strengthen markedly and the dollar value of gold, which tends to move in opposition to dollar strength, declined sharply.

Elsewhere on the Comex, silver for December delivery was down 1.57% at USD21.318 a troy ounce, while copper for December delivery was up 0.21% and trading at USD3.255 a pound.

Oil

Oil prices edged higher on Friday after data revealed the U.S. economy added more jobs than expected in October, though progress in talks between Iran and Western diplomats over the Tehran's nuclear ambitions capped gains.

On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.34 a barrel during U.S. trading, up 0.15%. 

The commodity hit a session low of USD93.91 and a high of USD94.69. The December contract settled down 0.63% at USD94.20 a barrel on Thursday.

Oil futures were likely to find support at USD93.11 a barrel, Tuesday's low, and resistance at USD95.40 a barrel, Wednesday's high.

Strong economic numbers (employment and GDP) supported oil prices, as a more robust U.S. economy will demand more fuel and energy going forward.

Capping gains, however, were market sentiments that the Federal Reserve could announce plans to scale back its USD85 billion in monthly asset purchases possibly as soon as December now that the labor market is showing signs of improvement.

Asset purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process, and talk of their dismantling strengthens the U.S. currency.

A stronger greenback makes oil a less attractive commodity on dollar-denominated exchanges.

Prices also came under pressure on reports that talks among Iran and Western diplomats are making progress and may eventually lead to a deal that would end Tehran's nuclear weapons ambitions and allow the country to resume exporting oil.

Trade sanctions slapped on Iran due to its alleged nuclear ambitions have taken out more than 1 million barrels per day of oil from the global market.

Meanwhile on the ICE Futures Exchange, Brent oil futures for December delivery were up 1.17% at USD104.68 a barrel, up USD10.34 from its U.S. counterpart.

Natural Gas

Natural gas prices rose on Friday after updated weather forecasting models predicted below-normal temperatures to stick around over parts of the central and eastern U.S. longer than once expected.

On the New York Mercantile Exchange, natural gas futures for delivery in December traded at USD3.580 per million British thermal units during U.S. trading, up 1.72%. 

The commodity hit a session low of USD3.511 and a high of USD3.583.

The December contract settled up 0.60% at USD3.519 per million British thermal units on Thursday.

Futures were likely to find support at USD3.381 per million British thermal units, Tuesday's low, and resistance at USD3.619, Thursday's high.

Updated weather forecasts called for normal to below-normal temperatures to stick around through mid-November.

Forecasts came in cooler than previous calls for largely normal to mild mercury readings issued earlier.

Cooler temperatures hike the need for heating this time of year, boosting demand for natural gas at the nation's thermal power generators.

Meanwhile, investors continued to digest Thursday's weekly inventory report, which many saw as positive in late-morning trading on Friday.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending Nov. 1 rose by 35 billion cubic feet, broadly in line with forecasts and on the bullish end of the spectrum.

Inventories rose by 27 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 36 billion cubic feet.

Total U.S. natural gas storage stood at 3.814 trillion cubic feet. Stocks were 112 billion cubic feet less than last year at this time and 57 billion cubic feet above the five-year average of 3.757 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 98 billion cubic feet below the five-year average, following net injections of 10 billion cubic feet. 

Stocks in the Producing Region were 111 billion cubic feet above the five-year average of 1.174 billion cubic feet after a net injection of 22 billion cubic feet.









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