Investing.com Weekly Wrap-Up 22 August 2014

August 22nd, 2014
in contributors, syndication, forex

U.S. stocks mixed as Ukraine offsets Yellen speech; Dow slides 0.22%

by Investing.com Staff, Investing.com

U.S. stocks finished Friday mixed after four straight days of gains, as escalating tensions between Ukraine and Russia offset an upbeat take on the U.S. economy from Federal Reserve Chair Janet Yellen.

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At the close of U.S. trading, the Dow 30 fell 0.22%, the S&P 500 index fell 0.20%, while the NASDAQ Composite index rose 0.14%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 2.47% at 11.47.

Follow up:

The overall economy and the labor market are improving though the Fed will still take its time raising interest rates, markets concluded Friday after Fed Chair Janet Yellen addressed the Federal Reserve Bank of Kansas City's annual Jackson Hole symposium.

"More jobs have now been created in the recovery than were lost in the downturn, with payroll employment in May of this year finally exceeding the previous peak in January 2008. Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years," Yellen said in prepared remarks of her speech.

"The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace."

Yellen's comments drew applause on Wall Street, as her speech also suggested that the Fed will still take its time raising interest rates to avoid disrupting recovery.

"Underutilization of labor resources still remains significant," Yellen said.

"Given this assessment and the Committee's expectation that inflation will gradually move up toward its longer-run objective, the Committee reaffirmed its view 'that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after our current asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.'"

Geopolitical concerns sparked profit taking, especially considering U.S. equities indices have posted solid gains over the past four days.

Ukraine declared on Friday that Russia had launched a "direct invasion" of its territory after Moscow sent a convoy of aid trucks across the border into eastern Ukraine where pro-Russian rebels are fighting government forces.

Leading Dow Jones Industrial Average performers included Merck & Company Inc (NYSE:MRK), up 0.54%, Nike Inc (NYSE:NKE), up 0.45%, and Pfizer Inc (NYSE:PFE), up 0.33%.

The Dow Jones Industrial Average's worst performers included General Electric Company (NYSE:GE), down 1.08%, Johnson & Johnson (NYSE:JNJ), down 1.05%, and Cisco Systems Inc (NASDAQ:CSCO), down 0.98%.

European indices, meanwhile, ended the day lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.81%, France's CAC 40 fell 0.93%, while Germany's DAX fell 0.66%. Meanwhile, in the U.K. the FTSE 100 fell 0.04%.

Forex

The rose against most major currencies on Friday after Federal Reserve Chair Janet Yellen's noted improvements taking place in the labor market , though profit taking trimmed the greenback's gains.

In U.S. trading on Friday, EUR/USD was down 0.21% at 1.3252.

Speaking at the Federal Reserve Bank of Kansas City's annual Jackson Hole symposium, Janet Yellen said the U.S. economy is recovering and added the labor market is improving as well.

Yellen's comments sparked a rally earlier for the dollar, though profit taking kicked in after markets concluded that the Fed will still take its time raising interest rates to avoid disrupting recovery.

The dollar was up against the yen, with USD/JPY up 0.07% at 103.92, and up against the Swiss franc, with USD/CHF up 0.23% at 0.9135.

The greenback was up against the pound, with GBP/USD down 0.02% at 1.6577.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.02% at 1.0943, AUD/USD up 0.15% at 0.9316 and NZD/USD down 0.05% at 0.8402.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.19% at 82.37.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) Bearish sentiment continued but was slightly weaker for the euro and Japanese yen; bullishness strengthened slightly for the UK pound. Bullishness totally collapsed to zeroe for the Mexican peso. The sentiment for all other currencies weakened slightly from a week earlier except for the Swiss franc which strengthened slightly. All sentiment is relative to the U.S. dollar. Note: This report is one week old.

cot-2014-aug-15

Gold

Gold prices rose on Friday as events heated up in Ukraine, while investors digested an upbeat take on the economy from Federal Reserve Chair Janet Yellen and concluded that despite improvements taking place in the labor market, slackness persists, leading investors to believe the Fed will take its time raising interest rates.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,281.20 a troy ounce during U.S. trading, up 0.45%, up from a session low of $1,275.00 and off a high of $1,283.70.

The December contract settled down 1.53% at $1,275.40 on Thursday.

Futures were likely to find support at $1,275.00 a troy ounce, the session low, and resistance at $1,304.90, Monday's high.

Speaking at the Federal Reserve Bank of Kansas City's annual Jackson Hole symposium, Janet Yellen said the U.S. economy is recovering and added the labor market is improving as well.

Yellen's comments sparked a rally earlier for the dollar, which trades inversely with gold, though the yellow metal rebounded after markets concluded that the Fed will still take its time raising interest rates to avoid disrupting recovery.

Meanwhile, silver for September delivery was down 0.09% at $19.398 a troy ounce, while copper futures for September delivery were up 0.95% at $3.206 a pound.

Oil

Crude prices dropped but remained range bound on Friday after investors locked in gains from upbeat U.S. data and sold the commodity for profits in a selloff fueled by concerns that the world is awash in crude.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in October traded down 0.90% at $93.11 a barrel during U.S. trading. New York-traded oil futures hit a session low of $92.94 a barrel and a high of $94.05 a barrel.

The October contract settled up 0.55% at $93.96 a barrel on Thursday.

Nymex oil futures were likely to find support at $92.50 a barrel, Thursday's low, and resistance at $94.45 a barrel, Thursday's high.

Positive economic indicators hitting the wire on Thursday sent oil prices ripe for profit taking on Friday.

The Federal Reserve Bank of Philadelphia said that its manufacturing index topped a three-year high of 28.0 this month from July's 23.9 reading. Analysts had expected the index to decline to 19.2 in July.

Separately, market research group Markit said that its preliminary U.S. manufacturing purchasing managers' index increased to a four-year high of 58.0 this month from a final reading of 55.8 in July. Analysts had expected the index to ease down to 55.7 in August.

Data also showed that U.S. existing home sales increased 2.4% to 5.15 million units last month from 5.03 million in June. Analysts had expected existing home sales to dip 0.4% to 5.02 million units in July.

Also on Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Aug. 16 decreased by 14,000 to 298,000 from the previous week's revised total of 312,000.

Analysts had expected jobless claims to fall by 12,000 to 300,000 last week.

Despite evidence that the U.S. economy is growing steam, slackness elsewhere in the global economy has resulted in a supply glut, many investors fear, which also pushed prices down on Friday.

Separately, on the ICE Futures Exchange in London, Brent oil futures for October delivery were down 0.43% and trading at US$102.19 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$10.08 a barrel.

Natural Gas

Natural gas prices fell on Friday after updated weather-forecasting models suggested a tropical low could intensify into a cyclone but would likely remain in the Atlantic Ocean and veer away from the Gulf of Mexico.

Tropical weather systems in the Gulf of Mexico often send prices rising, as rigs are evacuated and supply slows.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at $3.866 per million British thermal units during U.S. trading, down 0.60%. The commodity hit a session low of $3.851, and a high of $3.894.

The September contract settled up 1.73% on Thursday to end at $3.889 per million British thermal units.

Natural gas futures were likely to find support at $3.786 per million British thermal units, Thursday's low, and resistance at $3.955, Thursday's high.

A low-pressure system in the western Atlantic Ocean appeared poised to develop into a tropical cyclone, with the National Hurricane Center giving the storm a 60% chance of becoming a tropical depression in 48 hours and a 80% chance in 5 days.

Still, the latest model runs at the time of writing appeared to keep the system in the Atlantic Ocean and out of the gas-rich Gulf of Mexico, which allowed natural prices to soften on Friday.

Investors also digested Thursday's bearish supply data.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Aug. 15 rose by 88 billion cubic feet, surpassing expectations for an increase of 83 billion cubic feet, which sent prices falling earlier Thursday.

Inventories rose by 58 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 48 billion cubic feet.

Injections of gas into storage have surpassed the five-year average for 18 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 2.467 trillion cubic feet. Stocks were 500 billion cubic feet less than last year at this time and 535 billion cubic feet below the five-year average of 3.090 trillion cubic feet for this time of year.

 









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