Weekly Wrap-Up 04 April 2014

April 4th, 2014
in contributors, syndication

U.S. stocks fall in tech-led selloff; Dow down 0.96%, Nasdaq down 2.60%

by Staff, U.S. stocks shrugged off a lukewarm jobs report and plunged on Friday after investors ditched technology stocks in a heavy profit-taking session.

At the close of U.S. trading, the Dow 30 ended the session down 0.96%, the S&P 500 fell 1.25%, while the Nasdaq plunged 2.60%.

Follow up:

A correction in the technology sector sent broader stocks plunging on Friday, as investors jumped to the sidelines to await earnings releases next week.

Google Inc (NASDAQ:GOOG) shares fell 4.6%, while Facebook Inc (NASDAQ:FB) ended down 4.6% as well. Yahoo! Inc (NASDAQ:YHOO), meanwhile, slid 4.2%.

Elsewhere, the Department of Labor reported that the U.S. economy added 192,000 jobs in March, missing expectations for a 200,000 increase. February's figure was revised up to 197,000 from 175,000, while January's figure rose to 144,000 from 129,000.

The private sector added 192,000 jobs last month, below expectations for a 195,000 rise, while February's figure was revised up to 188,000 jobs added from a previously estimated 162,000 increase.

The report also showed that the U.S. unemployment rate remained unchanged at 6.7% last month compared to expectations for a 6.6% reading.

Investors viewed the data as not-too-hot, not-too-cold, and focused more on the selloff in the technology sector, which has boomed in recent years.

Leading Dow Jones Industrial Average performers included Coca-Cola Enterprises Inc (NYSE:CCE), up 0.41%, McDonald's Corporation (NYSE:MCD), up 0.24%, and The Travelers Companies Inc (NYSE:TRV), up 0.24%.

The Dow Jones Industrial Average's worst performers included Visa Inc (NYSE:V), down 3.22%, Microsoft Corporation (NASDAQ:MSFT), down 2.77%, and American Express Company (NYSE:AXP), down 1.99%.

European indices, meanwhile, finished higher.

After the close of European trade, the DJ Euro Stoxx 50 rose 0.64%, France's CAC 40 rose 0.79%, while Germany's DAX rose 0.70%. Meanwhile, in the U.K. the FTSE 100 rose 0.70%.


A lukewarm March jobs report weakened the dollar on Friday by clouding expectations as to how long the Federal Reserve will keep monetary stimulus programs in place.

The U.S. employment numbers sent investors rethinking when the Federal Reserve will raise interest rates once it winds down monthly asset purchases.

While lackluster, the numbers were not disappointing enough to sway investors' focus from the European Central Bank.

On Thursday, the ECB left its benchmark interest rate unchanged at a record-low 0.25%, held its marginal lending rate at 0.75% and left its deposit facility rate unchanged at zero.

ECB President Mario Draghi said monetary authorities did not exclude further monetary policy easing and reiterated the ECB's forward guidance that interest rates will remain at their current levels, or lower, for an extended period.

He added the ECB's governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to ward off deflationary pressures and added that the bank discussed the possibility of negative deposit rates.

Elsewhere on Friday, official data revealed that German factory orders rose 0.6% in February, beating expectations for a 0.1% gain. Factory orders in January were revised down to a 0.1% increase from a previously estimated 1.2% rise.

The dollar was down against the yen, with USD/JPY down 0.65% at 103.24, and up against the Swiss franc, with USD/CHF up 0.05% at 0.8916.

The greenback was up against the pound, with GBP/USD down 0.12% at 1.6579.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.47% at 1.0984, AUD/USD up 0.58% at 0.9286 and NZD/USD up 0.51% at 0.8590.

In Canada, official data showed that the economy added 42,900 jobs last month, exceeding expectations for a 21,500 rise, after a 7,000 decline in February.

Canada's unemployment rate declined to 6.9% in March, from 7% in February. Analysts had expected the unemployment rate to remain unchanged last month.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.06% at 80.56.


Gold prices shot up on Friday after a less-than-stellar March jobs report sent investors tweaking their estimations as to when the Federal Reserve will wind down stimulus programs that have supported the precious metal for years.

On the Comex division of the New York Mercantile Exchange, gGold for June delivery was up 1.42% at $1,302.90, off a session high of $1,307.00 and up from a low of $1,284.50

The June contract settled down 0.48% at $1,284.60 on Thursday.

Gold futures were likely to find support at $1,278.10 a troy ounce, Tuesday's low, and resistance at $1,335.60, the high from March 23.

While not terrible, the U.S. jobs report was lackluster enough to prompt investors to rethink the pace at which the Federal Reserve will wind down its stimulus programs.

The Fed is currently purchasing $55 billion in bonds a month to spur recovery, a monetary policy tool known as quantitative easing that suppresses interest rates to prop up the economy, weakening the dollar as a side effect, which bolsters gold's appeal as a hedge.

Gold and the dollar trade inversely with one another.

Past and present rounds of quantitative easing have elevated gold prices since 2008.

Friday's data prompted investors to trade on the notion that the U.S. central bank will take its time dismantling its bond-buying program.

Elsewhere on the Comex, silver for May delivery was up 0.64% and trading $19.932 a troy ounce, while copper for May delivery was down 0.30% and trading at $3.018 a pound.


Crude futures rose on Friday on a less-than-stellar but solid U.S. March jobs report as well as ongoing doubts as to whether armed protesters in Libya will allow oil exports to resume from seized ports.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in May traded at $101.16 a barrel during U.S. trading, up 0.87%. New York-traded oil futures hit a session low of $100.30 a barrel and a high of $101.62 a barrel.

The May contract settled up 0.67% at $100.29 a barrel on Thursday.

Nymex oil futures were likely to find support at $98.87 a barrel, Wednesday's low, and resistance at $101.96 a barrel, Monday's high.

While not earth shattering, the U.S. employment numbers still depicted a U.S. economy that continues to improve and will demand more fuel and energy going forward as it grows.

Elsewhere, hopes that oil ports held by armed protestors along the Libyan coast may begin shipments soon faded on Friday, and expectations for the impasse to drag on and bottleneck global supplies sent prices climbing.

An eight-month standoff between protestors and the government may end within days due to an agreement between both sides, though investors remained cautious until oil actually begins flowing from the Libyan coast.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for May delivery were up 0.44%, trading at US$106.62 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$5.46 a barrel.

Natural Gas

Profit taking sent natural gas futures edging lower on Friday after investors locked in gains from Thursday's bullish supply report and sold the commodity for profits.

On the New York Mercantile Exchange, natural gas futures for delivery in May traded at $4.449 per million British thermal units during U.S. trading, down 0.48%. The commodity hit session high of $4.476 and a low of $4.405.

The May contract settled up 2.43% on Thursday to end at $4.470 per million British thermal units.

Natural gas futures were likely to find support at $4.222 per million British thermal units, Wednesday's low, and resistance at $4.482, Thursday's high.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended March 28 fell by 74 billion cubic feet, in line with forecasts, which sent natural gas prices climbing to levels ripe for profit taking on Friday.

The five-year average change for the week is a drop of 8 billion cubic feet.

Total U.S. natural gas storage stood at 822 billion cubic feet, the lowest for this time of year since 2003.

Stocks were 878 billion cubic feet less than last year at this time and 992 billion cubic feet below the five-year average of 1.814 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 448 billion cubic feet below the five-year average, following net withdrawals of 46 billion cubic feet.

Stocks in the Producing Region were 410 billion cubic feet below the five-year average of 762 billion cubic feet after a net withdrawal of 24 billion cubic feet.

Investors continued to track weather forecasts, as moderate springtime temperatures typical of this time of year suppress demand for heating.

The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.


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