Investing.com Weekly Wrap-Up 19 September 2014

September 19th, 2014
in contributors, syndication, forex

Wall St. flat as Oracle takes air out of Alibaba debut

by Investing.com Staff, Investing.com

U.S. stocks closed little changed on Friday after Alibaba's strong debut was offset by falling technology shares as Oracle and Yahoo stumbled, but the Dow managed to edge higher to set a record for a second straight session.

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At the close of U.S. trading, the Dow 30 rose 0.08%, the S&P 500 index fell 0.05%, while the NASDAQ Composite index fell 0.30%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 0.67% at 12.11.

Follow up:

Alibaba (N:BABA) took the spotlight after its initial public offering priced at $68 a share and rose as high as $99.70 before ending the session up 38 percent to $93.89. Shares of Yahoo (O:YHOO), which is selling part of its Alibaba stake but will remain a top shareholder, were volatile in heavy volume and closed down 2.7 percent at $40.93.

Phil Orlando, chief equity market strategist at Federated Investors in New York said:

"Alibaba was awesome. The Alibaba deal was done correctly, which is, you leave something on the table for investors to enjoySo the market got to focus on Alibaba, which was a positive."

But technology shares weighed on the S&P 500 with Oracle (N:ORCL) down after Larry Ellison, co-founder and leader for 37 years, stepped aside as chief executive. He will be replaced by co-CEOs Safra Catz and Mark Hurd, raising questions about a job-sharing arrangement that has had a mixed record elsewhere.

Oracle shares lost 4.2 percent to $39.80 as the biggest drag on the S&P 500 while the S&P technology index <.SPLRCT> was the worst performing of the 10 major S&P sectors.

The Dow Jones industrial average (DJI) gained 13.75 points, or 0.08 percent, to 17,279.74, the S&P 500 (SPX) lost 0.96 points, or 0.05 percent, to 2,010.40, and the Nasdaq Composite (IXIC) dropped 13.64 points, or 0.3 percent, to 4,579.79.

Volume was heavy, with about 8.68 billion shares traded on U.S. exchanges, well above the 5.71 billion average so far this month, according to data from BATS Global Markets. Aside from Alibaba, volume also received a boost from "quadruple witching," the expiration of futures and options for indexes and stocks.

Dresser-Rand (N:DRC) jumped 9.4 percent to $79.91 after a report Germany's Siemens (DE:SIEGn) plans to offer more than $6.1 billion, or $80 per share, for the U.S. compressor and turbine maker.

Among the most active stocks on the NYSE were Alibaba, Coca-Cola Co (N:KO), up 0.62 percent to $42.05, and Bank Of America (N:BAC), down 0.53 percent to $16.95.

On the Nasdaq, Yahoo, Microsoft (O:MSFT), up 1.8 percent to $47.52 and Sirius XM (O:SIRI), down 1.8 percent to $3.57 were among the most actively traded.

Declining issues outnumbered advancing ones on the NYSE by 1,824 to 1,180, for a 1.55-to-1 ratio on the downside; on the Nasdaq, 1,796 issues fell and 951 advanced for a 1.89-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 75 new 52-week highs and 9 new lows; the Nasdaq Composite had 88 new highs and 117 new lows.

Forex

In U.S. trading on Friday, EUR/USD was down 0.67% at 1.2837.

The dollar rallied against the euro on expectations for U.S. and European monetary policies to diverge.

Earlier this week, the Federal Reserve suggested it plans to close its bond-buying stimulus program next month and hike interest rates in 2015.

While some time will pass between those two policy moves, rate hikes could come quickly once the U.S. central bank moves to tighten, investors have concluded, which bolstered the greenback.

Meanwhile across the Atlantic, the euro came under pressure after the European Central Bank on Thursday said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. The figure was well below the €100 to €150 billion predicted by analysts.

The European Central Bank recently cut interest rates and announced it would purchase asset-backed securities to stimulate the economy, which has softened the euro.

Elsewhere, market talk that the Bank of Japan bought one-year government debt at negative yields softened the yen, which added to the greenback's appeal.

While the BoJ has bought three- and six-month bills at negative yields in the past, the decision to buy one-year debt that will lose money added to market speculation that monetary authorities are ramping up their efforts to stimulate the economy and reach a 2% inflation target.

The dollar was up against the yen, with USD/JPY up 0.23% at 108.94, and up against the Swiss franc, with USD/CHF up 0.72% at 0.9404.

The greenback was up against the pound, with GBP/USD down 0.54% at 1.6309.

The pound strengthened earlier after Scottish voters rejected a referendum on independence and opted to remain part of the United Kingdom.

A record turnout of voters delivered a clear victory for the No campaign on Thursday, with 55% of Scottish voters rejecting independence and 45% backing it.

The pound later fell against the greenback, as many investors had already priced a No victory and sold sterling for profits.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.15% at 1.0953, AUD/USD down 0.61% at 0.8934 and NZD/USD down 0.22% at 0.8134.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.55% at 84.86.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) - After several weeks of increases, bearish sentiment became less negative for the euro and Japanese yen for the second week in a row. Bullishness for the British pound evaporated this week under the heat of concern that Scotland might secede from the UK. Bullish sentiment for the Australian dollar was cut in half. The sentiment for other currencies tracked were little changed from a week ago. All sentiment is relative to the U.S. dollar.

cot-2014-sep-12

Gold

Gold prices carried Thursday's losses into Friday as the dollar continued to firm on expectations that U.S. monetary stimulus programs will wrap up next month, while benchmark interest rates will climb next year.

Gold and the greenback tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, goldfutures for December delivery traded at 1,216.50 a troy ounce during U.S. trading, down 0.85%, up from a session low of $1,214.90 and off a high of $1,229.10.

The December contract settled down 0.73% at $1,226.90 on Thursday.

Futures were likely to find support at $1,182.00 a troy ounce, the low from Dec. 31, 2013, and resistance at $1,243.20, Tuesday's high.

The dollar earlier firmed on expectations for U.S. and European monetary policies to diverge, which came at gold's expense.

Earlier this week, the Federal Reserve suggested it plans to close its bond-buying stimulus program next month and hike interest rates in 2015.

While some time will pass between those two policy moves, rate hikes could come quickly once the U.S. central bank moves to tighten, many investors have concluded, which bolstered the greenback and softened demand for the yellow metal.

Meanwhile across the Atlantic, the euro came under pressure after the European Central Bank on Thursday said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. The figure was well below the €100 to €150 billion predicted by analysts.

The European Central Bank recently cut interest rates and announced it would purchase asset-backed securities to stimulate the economy, which has softened the euro, which has made the dollar an attractive buy.

Meanwhile, silver for December delivery was down 3.75% at $17.822 a troy ounce, while copper futures for December delivery were down 0.14% at $3.090 a pound.

Oil

A stronger U.S. dollar coupled with concerns the world is awash in crude sent oil futures falling on Friday.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in November traded down 0.43% at $91.58 a barrel during U.S. trading. New York-traded oil futures hit a session low of $91.16 a barrel and a high of $92.24 a barrel.

The November contract settled down 1.31% at $91.98 a barrel on Thursday.

Nymex oil futures were likely to find support at $89.76 a barrel, Monday's low, and resistance at $94.12 a barrel, Tuesday's high.

Concerns that global oil supply is outstripping demand sent crude futures falling on Friday.

While the U.S. economy is gaining steam and will likely consume more fuel and energy going forward, Europe and China are still battling headwinds, which has taken its toll on energy markets.

A stronger dollar also fueled the selloff.

The Federal Reserve on Wednesday said that it will likely close its monthly bond-buying program in October and suggested it will raise interest rates in 2015.

While some time will pass when the bond-buying program closes and rates begin to rise, investors concluded that borrowing costs are set to climb in 2015 regardless, which should open the door to a gradual strengthening trend for the dollar.

Wednesday's bearish U.S. storage data also kept prices in negative territory.

The U.S. Energy Information Administration said in its weekly report on Wednesday that U.S. crude oil inventories increased by 3.7 million barrels in the week ended Sept. 12, confounding expectations for a decline of 1.7 million barrels, which stoked fears of a supply glut.

Total U.S. crude oil inventories stood at 362.3 million barrels as of last week.

The report also showed that total motor gasoline inventories decreased by 1.6 million barrels, compared to forecasts for a decline of 0.3 million barrels, while distillate stockpiles rose by 0.3 million barrels.

Separately, on the ICE Futures Exchange in London, Brent oil futures for November delivery were up 0.50% at US$98.19 a barrel, while the spread between Brent and U.S. crude contracts stood at US$6.61 a barrel.

Natural Gas

Natural gas prices fell on Friday after updated weather-forecasting models called for mild temperatures for a good portion of the U.S. into early October, which should dampen demand for both conditioning.

Demand for heating could arise, which cushioned the commodity's losses.

On the New York Mercantile Exchange, natural gas futures for delivery in October were down 1.62% at $3.847 per million British thermal units during U.S. trading. The commodity hit a session low of $3.835, and a high of $3.916.

The October contract settled down 2.57% on Thursday to end at $3.910 per million British thermal units.

Natural gas futures were likely to find support at $3.786 per million British thermal units, last Friday's low, and resistance at $4.078, the high from Sept. 2.

Natgasweather.com reported in its Friday midday update:

"The latest forecast data continue to stream in and remain in line with our going forecast of very comfortable U.S. weather patterns setting up into the first week of October. After much of the U.S. experiences highs in the 70s and 80s this weekend, a fast moving weather system will track across the Midwest and Northeast Monday and Tuesday and will drive some light heating demand,"

"This will likely be the last somewhat chilly weather system over the central and eastern U.S. until October."

Thursday's stockpile report kept prices in negative territory as well.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Sept. 12 rose by 90 billion cubic feet, broadly in line with market expectations.

Inventories rose by 48 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 71 billion cubic feet, a figure that sent prices dropping on Thursday and into Friday as well.

Injections of gas into storage have surpassed the five-year average for 22 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 2.891 trillion cubic feet. Stocks were 401 billion cubic feet less than last year at this time and 444 billion cubic feet below the five-year average of 3.335 trillion cubic feet for this time of year.

Updated weather-forecasting models calling for mild temperatures across the eastern and northern U.S. pressured prices lower as well, as thermal power plants will burn less of the commodity to reduced use of air conditioning.

 









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