Investing.com Weekly Wrap-Up 07 August 2015

August 7th, 2015
in contributors, syndication, forex

Dow falls for 7th straight day, as jobs report adds supports for IR hike

by Investing.com Staff, Investing.com

U.S. stocks moved broadly lower on Friday, as solid employment figures for July ostensibly bolstered hawkish arguments for an imminent interest rate hike by the Federal Reserve before the end of the fall. For the day, the Dow lost 46.37 or 0.27% to 17,373.38 for its seventh straight losing session. The Dow remains near its lowest level since February.

The NASDAQ Composite index and the S&P 500 Composite index also ended the week on a down note, each closing lower for the second straight day. The NASDAQ lost 12.90 or 0.26% to close at 5,043.54, while the S&P 500 dipped 5.99 or 0.29% to 2,077.57, as eight of 10 sectors closed in the red. Stocks in the Energy and Basic Materials industries lagged, each falling by more than 1.6 % on the session.

Follow up:

Dwindling energy stocks weighed on the Dow Jones Industrial Average, as Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) finished among the worst performers, after crude futures slipped below $44 a barrel for the first time in nearly six months.

The NASDAQ lost 12.90 or 0.26% to close at 5,043.54, while the S&P 500 dipped 5.99 or 0.29% to 2,077.57, as eight of 10 sectors closed in the red. Stocks in the Energy and Basic Materials industries lagged, each falling by more than 1.6 % on the session.

On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said the number of non-farm payrolls in the nation during the month of July increased by 215,000, in line with consensus estimates of a 212,000 gain. The national unemployment rate remained unchanged at 5.3%, while a broader measure of unemployment, which takes into account workers marginally attached to the labor force who are no longer actively seeking employment, fell more than 2% on a year-over-year basis to under 10.5%.

The top performer on the Dow was American Express Company (NYSE:AXP), which surged 4.90 or 6.53% to 79.90 after private equity firm ValueAct Capital Management reportedly declared an activist stake in the credit card giant, according to Bloomberg. The worst performer was Wal-Mart Stores Inc (NYSE:WMT), which fell 1.53 or 2.10% to 71.26.

The biggest gainer on the NASDAQ was NVIDIA Corporation (NASDAQ:NVDA), after the Silicon Valley-based semiconductor company, posted stronger than expected quarterly results on the back of a 51% revenue spike generated by its GeForce graphics processors. Nvidia gained 2.52 or 12.32% to end the session at 22.97. The worst performer was CONSOL Energy Inc (NYSE:CNX), which fell 1.14 or 7.98% to 13.15 amid the continued downturn in crude prices.

Nvidia was also the top performer on the S&P 500, ahead of Coach Inc (NYSE:COH) which rose 1.53 or 4.85% to 33.09. Consol Energy finished as the S&P 500's worst performer, as well, just below Genworth Financial (NYSE:GNW), which continues to struggle after posting disappointing earnings earlier this week. Shares in Genworth Financial plunged more than 7.3% to 4.84.

On the New York Stock Exchange, declining issues outnumbered advancing ones by a 1,853 to a 1,294 margin.

Additional stock news from Reuters at Investing.com.

Forex

EUR/USD rose considerably on Friday extending its winning streak to a third straight session, as steady gains in the U.S. labor market last month bolstered the case for a September interest rate hike by the Federal Reserve.

The currency pair traded in a range between 1.0856 and 1.0978 during Friday's session, before settling at 1.0961, up 0.0037 or 0.34%. Despite the minor rally at the end of this week, EUR/USD still closed the week virtually unchanged declining by less than 0.10% from its level at the start of Monday's trade. Over the last month, the dollar has gained approximately 0.80% against its European counterpart.

EUR/USD likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1131, the high from July 27.

On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said the number of non-farm payrolls in the nation during the month of July increased by 215,000, in line with consensus estimates of a 212,000 gain. The Labor Department also upwardly revised non-farm payrolls for June by 8,000 to 231,000.

In addition, waged ticked up by 0.2 % after remaining flat in June - representing an increase of 2.1% on a year-over-year basis. The unemployment rate remained unchanged at 5.3%, also in line with consensus estimates of 5.3%. Earlier this week, Fed governor Jerome Powell said he would take a data-driven approach to the timing of a September rate hike, placing particular emphasis on the strength of the labor market over the next month.

The U-6 unemployment rate, a broader gauge of the national employment situation, inched down 0.1% to 10.4% on the moth. The reading, which measures the total level of unemployed workers plus those marginally attached to the labor force, as well as those who are no longer looking for a job but have looked for one over the last 12 months, stood at 12.6% last July. By comparison, the U-6 rate peaked above 17% during the height of the financial crisis. It is also a preferred measure of Fed chair Janet Yellen, as she weighs whether the labor market has improved to the point which would warrant an imminent rate hike.

The dollar, meanwhile, moved broadly higher following the release of the report, before falling back sharply near the close. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a four-month high at 98.41 before turning negative for the session at 97.67, down 0.21%.

The report had a muted impact on the government bond market, as yields on U.S. Treasuries remained virtually unchanged at the end of Friday's session. Yields on 2-Year Treasuries, which are typically sensitive to major monetary policy changes from the Fed, initially climbed to 0.75% to move near a four-year high following the release. The U.S. 2-Year, however, ended the session at 0.72%, up only two basis points for the day.

CTFC Commitment of Traders

Speculators this week were les bearish on EUR and GBP and more bearish on CAD and AUD.

cot.2015.jul.31

Gold

Gold futures ticked up on Friday amid a relatively flat dollar, in spite of solid U.S. employment figures last month which provided further indications that the Federal Reserve could raise short-term interest rates in September for the first time in nearly a decade.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,082.10 and $1,098.90 an ounce, before settling at $1,093.50, up 3.40 or 0.32% on the session. For the week, the precious metal experienced little fluctuation closing near its opening level on Monday of $1,095.10. Gold is still down more than 9% from mid-June when it peaked above $1,200 an ounce.

Gold likely gained support at $1,079.20, the low from July 31 and was met with resistance at $1,104.90, the high from July 27.

On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said the number of non-farm payrolls in the nation during the month of July increased by 215,000, in line with consensus estimates of a 212,000 gain. The figure received a boost from a 60,000 gain in Trade & Transportation jobs, as well as a 40,000 increase in Professional & Business service positions. The Labor Department also upwardly revised non-farm payrolls for June by 8,000 to 231,000.

In addition, waged ticked up by 0.2 % after remaining flat in June - representing an increase of 2.1% on a year-over-year basis. The unemployment rate remained unchanged at 5.3%, also in line with consensus estimates of 5.3%. Earlier this week, Fed governor Jerome Powell said he would take a data-driven approach to the timing of a September rate hike, placing particular emphasis on the strength of the labor market over the next month.

The U-6 unemployment rate, a broader gauge of the national employment situation, inched down 0.1% to 10.4% on the moth. The reading, which measures the total level of unemployed workers plus those marginally attached to the labor force, as well as those who are no longer looking for a job but have looked for one over the last 12 months, stood at 12.6% last July. By comparison, the U-6 rate peaked above 17% during the height of the financial crisis. It is also a preferred measure of Fed chair Janet Yellen, as she weighs whether the labor market has improved to the point which would warrant an imminent rate hike.

Gold, which is not attached to the dividends or interest rates, struggles to compete with high-yield bearing assets in rising rate environments.

The dollar, meanwhile, moved broadly higher following the release of the report, before falling back in U.S. afternoon trading. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a four-month high at 98.41 before turning negative for the session at 97.67, down 0.21%.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery gained 0.173 or 1.18% to 14.850 an ounce.

Copper for September delivery fell 0.009 or 0.37% to 2.332 a pound.

Oil

U.S. crude futures remained near 2015-yearly lows on Friday, as a modest build in oil rigs last week provided fresh concerns of the bearish effects of an increasing glut of oversupply on dwindling oil prices.

On the New York Mercantile Exchange, WTI crude for September delivery traded between $43.81 and $45.15 a barrel, before settling at $43.91, down 0.74 or 1.67% for the session. It marked one of the few times on the calendar year that Texas Light Sweet futures have dipped below $44 a barrel. U.S. crude futures have declined by more than 20% over the last month.

On the Intercontinental Exchange (ICE), Brent crude for September delivery wavered between $48.45 and $50.06 a barrel, before closing at $48.64, down 0.88 or 1.78% for the session. The spread between the international and U.S. benchmarks of crude stood at $4.73, above/below Thursday's level of $4.46 at the close.

Oil services firm Baker Hughes (NYSE:BHI) said in its weekly rig count on Friday that U.S. oil rigs rose by six to 670 for the week that ended on July 31, marking the third consecutive week of weekly builds. Oil rigs nationwide have now moved higher in five of the last six weeks, following more than 25 weeks of weekly draws. Last fall, the U.S. oil rig count peaked above 1,500.

Earlier this week, the U.S. Energy Information Administration (EIA) said U.S. crude inventories decreased by 4.4 million barrels for the week ending on July 31, extending a mild draw from a week earlier. At 455.3 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.

Crude output for the week, meanwhile, rose by 52,000 barrels to 9.465 million barrels per day, following three previous weeks of weekly draws. U.S. crude production remains near its highest level in more than 40 years. It came as Saudi Arabia ramped up production in July to 70,000 barrels to 10.57 million bpd, sparking concerns that the kingdom could average 11 million bpd for the second half of the year.

Last November, OPEC triggered a crash in energy prices with a strategic decision to keep its production ceiling over 30 million barrels per day. Presumably, the world's largest oil cartel concocted the strategy in an effort to undercut U.S. shale producers, which face higher relatively drilling costs than their Saudi counterparts. The shale producers, however, have responded by drilling more efficiently to maintain production levels even as crude prices tumble.

Elsewhere, the dollar moved broadly higher amid solid U.S. jobs figures for the month of July before falling back slightly in afternoon trading. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a four-month high at 98.41 before turning negative for the session at 97.67, down 0.21%.

Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.

Natural Gas (Thursday Report)

Natural gas futures reversed losses to trade modestly higher on Thursday, after data showed that U.S. natural gas supplies rose less than expected last week.

Natural gas for delivery in September on the New York Mercantile Exchange tacked on 0.8 cents, or 0.3%, to trade at $2.806 per million British thermal units during U.S. morning hours. Prices were at around $2.735 prior to the release of the 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 July 31 rose by 32 billion cubic feet, below expectations for an increase of 42 billion and following a build of 52 billion cubic feet in the preceding week.

Supplies rose by 83 billion cubic feet in the same week last year, while the five-year average change is an increase of 53 billion cubic feet.

Total U.S. natural gas storage stood at 2.912 trillion cubic feet as of last week. Stocks were 535 billion cubic feet higher than last year at this time and 64 billion cubic feet above the five-year average of 2.848 trillion cubic feet for this time of year.

A day earlier, natural gas rallied to $2.863, the most since July 30, before turning lower to end at $2.798, down 1.4 cents, or 0.5%, as weather forecasts turned milder.

Updated weather forecasting models indicated that hotter weather in the west, central and southern U.S. would give way to more moderate temperatures through August 20.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Natural gas accounts for about a quarter of U.S. electricity generation.









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