Investing.com Weekly Wrap-Up 20 December 2013

December 20th, 2013
in contributors, syndication

by Investing.com Staff, Investing.com

U.S. stocks gain on strong U.S. growth data; Dow rises 0.26%

A surprisingly strong U.S. economic growth report sent stocks rising on Friday by fanning expectations for U.S. recovery to gain steam and allow for more solid investing.com-logocorporate fundamentals in the future.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.26%, the S&P 500 index rose 0.48%, while the Nasdaq Composite index rose 1.15%.

Follow up:

The Commerce Department reported earlier that the U.S. gross domestic product expanded by 4.1% in the third quarter, well above consensus forecasts for 3.6% growth.

The report sent stocks rising by fanning hopes that corporate fundamentals will improve with the economy and grow without the support of the Federal Reserve's monthly USD85 billion bond-buying program.

On Wednesday, the Fed said it would trim its monthly asset purchases by USD10 billion in January, which markets applauded.

Trading volume was heavy, as stock index futures, stock index options, stock options and single stock futures expired, which happens on the third Friday of March, June, September and December.

Leading Dow Jones Industrial Average performers included Caterpillar, up 1.59%, Microsoft, up 1.50%, and UnitedHealth, up 1.46%.

The Dow Jones Industrial Average's worst performers included Nike, down 1.27%, Pfizer, down 1.24%, and Walt Disney, down 0.64%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.56%, France's CAC 40 rose 0.40%, while Germany's DAX 30 rose 0.69%. Meanwhile, in the U.K. the FTSE 100 finished up 0.33%.

Forex

The dollar gave back earlier gains against most major currencies and dipped on Friday after better-than-expected U.S. growth data enticed investors out of safe-haven dollar positions and into higher-yielding currencies and stocks.

Investors also sold the dollar for profits after locking in gains from the Federal Reserve's decision to trim its USD85 billion in monthly bond purchases by USD10 billion.

In U.S. trading on Friday, EUR/USD was up 0.07% at 1.3655.

The dollar rallied after the Federal Reserve announced on Wednesday that it was cutting its USD85 billion monthly bond-buying program by USD10 billion in January now that the economy is gaining steam.

Fed bond purchases tend to weaken the dollar by driving down long-term interest rates.

On Friday, profit taking kicked in and weakened the greenback, while surprisingly strong U.S. economic growth rates sent investors ditching the greenback for risk-on asset classes such as stocks later in the session.

The Commerce Department reported earlier that the U.S. gross domestic product expanded by 4.1% in the third quarter, well above consensus forecasts for 3.6% growth.

Meanwhile in Europe, Standard & Poor's cut the European Union's long-term credit ratings to 'AA+' from 'AAA' over concerns that E.U.'s financial profile has deteriorated while cohesion among E.U. members has lessened, though the euro shrugged off the news.

Also in Europe, the Gfk German consumer climate index rose to 7.6 in December from 7.4 in November. Analysts were expecting the index to remain unchanged this month.

Also in Germany, the producer price index in Europe's largest economy fell 0.1% in November, in line with expectations after a 0.2% decline the previous month.

Elsewhere, the greenback was up against the pound, with GBP/USD down 0.26% at 1.6330.

Official data showed that the U.K. current-account deficit widened to GBP20.7 billion in the third quarter from GBP6.2 billion in the three months to June. Analysts were expecting the current account deficit to widen to GBP13.9 billion in the last quarter.

A separate report showed that the U.K. gross domestic product expanded by 0.8% in the third quarter, in line with previous estimates.

Official data also showed that public sector net borrowing in the U.K. rose by GBP14.8 billion in November, exceeding expectations for a GBP13.4 billion rise, after a downwardly revised GBP7.4 billion increase in October.
The dollar was down against the yen, with USD/JPY down 0.19% at 104.05, and up against the Swiss franc, with USD/CHF down 0.23% at 0.8958.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.12% at 1.0651, AUD/USD up 0.60% at 0.8920 and NZD/USD trading up 0.03% at 0.8194.

In Canada, official data revealed that the country's consumer price index came in flat in November compared to expectations for a 0.2% fall. Core consumer price inflation, which excludes the eight most volatile items, ticked down 0.1% last month, confounding expectations for a 0.1% rise.

A separate report showed that retail sales in Canada slipped 0.1% in October, disappointing expectations for a 0.3% rise. Core retail sales, which exclude automobiles, increased by 0.4% in October, compared to expectations for a flat reading.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.04% at 80.74.

GOLD

Gold prices rose on Friday after bargain hunters snapped up nicely-priced positions in the yellow metal, erasing losses stemming from the Federal Reserve's Wednesday decision to trim its USD85 billion in monthly bond purchases by USD10 billion beginning in January.

Bond purchases seek to boost recovery by pushing down interest rates, weakening the dollar in the process and making gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,204.30 during U.S. afternoon hours, up 0.90%.

Gold prices hit a session low of USD1,186.50 a troy ounce and high of USD1,206.80 a troy ounce.

Gold futures were likely to find support at USD1,180.35 a troy ounce, the low from June 28, and resistance at USD1,251.40, Monday's high.

The February contract settled down 3.35% at USD1,193.60 a troy ounce on Thursday.

Gold took a beating after the Fed on Wednesday announced that it would reduce its USD85 billion-a-month bond-buying program by USD10 billion in January.

Fed bond purchases, in effect for 15 months now, have supported gold by bolstering its image as a hedge to the dollar's weakening trend that comes with monetary intervention in the economy.

By Friday, investors sold the greenback for profits and bought gold at attractive prices

Gains were limited, however, after better-than-expected U.S. growth rates hit the wire and gave the dollar support.

Elsewhere on the Comex, silver for March delivery was up 1.26% at USD19.428 a troy ounce, while copper for March delivery was up 0.37% and trading at USD3.308 a pound.

Oil

Oil prices rose on Friday after data revealed the U.S. economy expanded more than expected in the third quarter, which fueled hopes the country will demand more fuel and energy going forward.

On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD99.32 a barrel during U.S. trading, up 0.28%.

The commodity hit a session low of USD98.58 and a high of USD99.40. The February contract settled up 1.00% at USD99.04 a barrel on Thursday.

Oil futures were likely to find support at USD96.53 a barrel, Monday's low, and resistance at USD99.48 a barrel, Thursday's high.

The Commerce Department reported earlier that the U.S. gross domestic product expanded by 4.1% in the third quarter, well above consensus forecasts for 3.6% growth, which sent oil prices rising on hopes for faster economic recovery.

The Federal Reserve's Wednesday decision to trim its USD85 billion monthly bond-buying program by USD10 billion beginning in January bolstered prices as well by further stoking expectations for more pronounced economic growth down the road.

Thursday's sluggish economic indicators capped gains, however, allowing for choppy trading.

The Federal Reserve Bank of Philadelphia said on Thursday that its manufacturing index jumped to 7.0 for December from November's 6.5 reading, though analysts were expecting the index to rise to 10.0 this month.

A separate report showed that U.S. existing home sales declined 4.3% to a seasonally adjusted 4.90 million units in November from 5.12 million in October. Analysts were expecting U.S. existing home sales to fall 1.5% to 5.03 million units last month.

Also on Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Dec. 14 increased by 10,000 to a seasonally adjusted 379,000, the highest level since March.

Analysts were expecting U.S. jobless claims to fall to 334,000 last week from the previous week's revised total of 369,000.

Meanwhile on the ICE Futures Exchange, Brent oil futures for February delivery were up 1.31% at USD111.74 a barrel, up USD12.42 from its U.S. counterpart.

Natural Gas

A warm snap over the eastern U.S. sent natural gas prices falling on Friday though updated weather-forecasting models predicted a return of below-normal temperatures by the end of December allowed for choppy trading.

On the New York Mercantile Exchange, natural gas futures for delivery in January traded at USD4.441 per million British thermal units during U.S. trading, down 0.44%.

The commodity hit a session low of USD4.415 and a high of USD4.491.

The January contract settled up 4.92% at USD4.460 per million British thermal units on Thursday.

Futures were likely to find support at USD4.196 per million British thermal units, Tuesday's low, and resistance at USD4.983, the high from June 9, 2011.

A warming trend currently taking place over the eastern U.S. will run through Dec. 25, which sent prices falling though updated weather forecasts called for a return of below-normal temperatures across the eastern U.S. for late December and early January, which sent the prices jumping in and out of positive territory.

Warmer weather forecasts for the western U.S. in the coming weeks pushed prices lower as well.

Milder temperatures diminish the need for heating this time of year, thus decreasing demand for natural gas at the nation's thermal power generators.

Bullish supply data released on Thursday chopped up trading as well.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ended December 13 fell by 285 billion cubic feet, well beyond expectations for a withdrawal of 258 billion cubic feet.

Inventories fell by 70 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 133 billion cubic feet.

Total U.S. natural gas storage stood at 3.248 trillion cubic feet. Stocks were 488 billion cubic feet less than last year at this time and 261 billion cubic feet below the five-year average of 3.509 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 207 billion cubic feet below the five-year average, following net withdrawals of 132 billion cubic feet.

Stocks in the Producing Region were 23 billion cubic feet below the five-year average of 1.138 billion cubic feet after a net withdrawal of 99 billion cubic feet.









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved