Investing.com Weekly Wrap-Up 19 December 2014

December 19th, 2014
in contributors, syndication, forex

U.S. stocks extend gains on Fed assurances; Dow gains 0.15%

by Investing.com Staff, Investing.com

U.S. stocks finished a three-day rally on Friday as investors continued to applaud the Federal Reserve's commitment to be patient when deciding when to hike interest investing.com-logorates.

At the close of U.S. trading, the Dow 30 rose 0.15%, the S&P 500 index rose 0.46%, while the Nasdaq Composite index rose 0.36%.

The S&P 500 VIX index, which measures the outlook for market volatility, was down 1.90% at 16.49.

Follow up:

The Federal Reserve said on Wednesday it was leaving its benchmark interest rate unchanged at 0.00-0.25% and added it will exercise patience when raising interest rates to make sure the economy continues to improve.

In past statements, the Fed said it would take "considerable time" to make sure recovery is underway before tightening policy.

In Wednesday's statement, the Fed left in that dovish phrase, though the context of the language suggested that the "considerable time" wordage applied to past statements, leaving markets to conclude that even though rate hikes are on the way, monetary authorities will be patient when acting.

The Fed's language sparked a three-day rally on Wall Street by fueling expectations that borrowing costs will remain low for some time to come while economic fundamentals continue to improve and bolster corporate top and bottom lines.

Thursday's upbeat data out of the labor market drew applause as well.

The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Dec. 12 fell by 6,000 to 289,000 from the previous week's revised total of 295,000. Economist had forecast an increase of 1,000.

Elsewhere, manufacturing activity in the Philadelphia-region slowed in December after expanding at the fastest rate since December 1993 last month, according to data released on Thursday.

The Federal Reserve Bank of Philadelphia said its manufacturing index came in 24.5 at this month, down from 40.8 in November.

Economists had forecast a decline to 26.6.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.

Leading Dow Jones Industrial Average performers included Chevron Corporation(NYSE:CVX), up 3.58%, Exxon Mobil Corporation (NYSE:XOM), up 2.72%, and General Electric Company (NYSE:GE), up 1.91%.

The Dow Jones Industrial Average's worst performers included Nike Inc (NYSE:NKE), down 2.31%, Intel Corporation (NASDAQ:INTC), down 1.76%, and United Technologies Corporation (NYSE:UTX), down 1.18%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the Euro Stoxx 50 fell 0.53%, France's CAC 40 fell 0.18%, while Germany's DAX 30 fell 0.25%. Meanwhile, in the U.K. the FTSE 100 rose 1.23%.

Forex

The dollar traded higher against most major currencies on Friday in subdued trading after falling jobless assistance claims and reassurances from the Federal Reserve this week continued to stoke expectations for rate hikes in 2015.

In U.S. trading on Friday, EUR/USD was down 0.49% at 1.2226.

The dollar enjoyed support after the U.S. Department of Labor said on Thursday that the number of individuals filing for initial jobless benefits in the week ending Dec. 12 fell by 6,000 to 289,000 from the previous week's revised total of 295,000. Economist had forecast an increase of 1,000.

The data came a day after the Fed said it would be "patient" before raising rates, guidance which it said is consistent with earlier assurances statement that rates would stay low "for a considerable time."

Fed Chair Janet Yellen said the central bank was unlikely to raise rates for the "next couple of meetings" indicating that a move in April at the earliest is possible.

Still, the dollar saw support on the notion that the days of rock-bottom interest rates are coming to an end.

Meanwhile in Europe, data released earlier revealed that the Gfk German consumer climate index rose to a six-month high of 9.0 in December from a reading of 8.7 the previous month. Analysts had expected the index to tick up to 8.9 this month.

The dollar was up against the yen, with USD/JPY up 0.62% at 119.58, and up against the Swiss franc, with USD/CHF up 0.43% at 0.9841.

The greenback was up against the pound, with GBP/USD down 0.20% at 1.5639.

The Office for National Statistics reported earlier that U.K. public sector net borrowing rose by £13.41 billion last month compared to expectations for an increase of £15.37 billion.

Separately, the Confederation of British Industry said its index of realized sales climbed to a 26-year high of 61 this month from 27 in November, blowing bast expectations for an increase to 30.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.20% at 1.1602, AUD/USD down 0.19% at 0.8148 and NZD/USD down 0.13% at 0.7752.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.44% at 89.84.

Commitment of Traders

The Commodity Futures Trading Commission released its weekly Commitments of Traders report for the week ending December 16 on Friday. Speculators were less bearish on most currencies except for the Canadian dollar and Mexican peso. Bullishness surged for the S&P 500 and increased modestly for gold.

cot-2014-dec-19

Gold

Gold futures came off earlier lows and moved into positive territory on Friday after investors felt the commodity had fallen too far amid a dollar rally.

Gold prices have tumbled in recent months as markets prep for the Fed to raise interest rates, which is widely seen taking place in 2015, as higher borrowing costs chip away at the precious metal's appeal as a hedge to weaker paper currencies, the product of loose monetary policy.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.13% at $1,196.30, up from a session low of $1,194.40 and off a high of $1,201.40.

The February contract settled up 0.03% at $1,194.80 on Thursday.

Futures were likely to find support at $1,182.00 a troy ounce, Wednesday's low, and resistance at $1,213.90, Thursday's high.

The dollar continued to see support after after the strong unemployment claims report and the "patient" words from the Fed this week about raising interest rates. However Janet Yellen's remarks indicated that raising rates in 2015 was possible and the dollar firmed on the notion that the days of rock-bottom interest rates are coming to an end, which chipped away at gold prices until bottom fishers sent the commodity back into positive territory.

Elsewhere, silver for March delivery was up 0.71% at $16.047 a troy ounce, while copper futures for March delivery were up 1.29% at $2.890 a pound.

Oil

Crude oil futures were higher in U.S. trading hours on Friday.

On the New York Mercantile Exchange, Crude oil futures for February delivery traded at USD58.26 a barrel at time of writing rising 7.17%.

It earlier traded at a session high USD58.38 a barrel. Crude oil was likely to find support at USD53.94 and resistance at USD59.27.

Oil prices rallied on Friday due to short covering taking place just before the holidays as well as on residual applause this week's U.S. supply report.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 0.847 million barrels in the week ending Dec, 12.

The draw fell short of expectations for a decline of 2.36 million barrels, though oil prices shot up as investors viewed an earlier American Petroleum Institute report revealing an unexpected 1.9 million barrel increase in U.S. oil stockpiles as an anomaly.

Elsewhere on the ICE, Brent oil for February delivery rose 5.66% to trade at USD62.62 a barrel, with the spread between the Brent oil and Crude oil contracts standing at USD4.36 a barrel.

Natural Gas

Natural gas futures dropped on Friday after updated weather-forecasting models scaled back on the reach inbound winter storms will have over the U.S. in the coming days, which should curb demand for the heating fuel.

On the New York Mercantile Exchange, natural gas futures for delivery in January were down 4.60% at $3.475 per million British thermal units during U.S. trading. The commodity hit a session low of $3.455, and a high of $3.676.

The January contract settled down 1.62% on Thursday to end at $3.642 per million British thermal units.

Natural gas futures were likely to find support at $3.379 per million British thermal units, the low from Nov. 5, 2013, and resistance at $3.805, Thursday's high.

Winter weather systems are due to push into the U.S. from Canada in the coming days, though a good chunk of the central and eastern portions of the country may avoid the brunt of icy temperatures. Natgasweather.com reported in its Friday Midday Update:

"Weather conditions are expected to rapidly change beginning Monday as a weather system tracks into the northern Plains and then pushes colder temperatures deep into the central U.S., which will aid in the development of a strong storm that will track across the country Dec. 23rd and 24th with increasing rain, snow, and strong winds.

"But as we have been mentioning, this system will only tap a modest amount of cold air compared to following ones. In addition, the core of the low is likely to stall just before reaching the Northeast. This would allow more of the precipitation to fall as rain along the cold front with lesser snow amounts into the cold air."

Investors continued to digest Thursday's week supply report.

The U.S. Energy Information Administration said that natural gas storage fell by 64 billion cubic feet last week, exceeding expectations for a decline of 60 billion after a drop of 51 billion in the previous week, which sent prices rising earlier.

Inventories fell by 6 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 258 billion cubic feet.

Total U.S. natural gas storage stood at 3.295 trillion cubic feet.

 









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