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posted on 11 December 2015

Investing.com Weekly Wrap-Up 11 December 2015

Written by , Investing.com

U.S. stocks lower at close of trade; Dow Jones Industrial Average down 1.76%

U.S. stocks were lower after the close on Friday, as losses in theOil & Gas, Basic Materials and Consumer Services sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average declined 1.76%, while theS&P 500 index lost 1.94%, and the NASDAQ Composite index fell 2.21%.

The best performers of the session on the Dow Jones Industrial Average were Procter & Gamble Company (N:PG), which fell 0.01% or 0.01 points to trade at 77.78 at the close. Meanwhile, UnitedHealth Group Incorporated (N:UNH) fell 0.20% or 0.23 points to end at 115.98 and Wal-Mart Stores Inc (N:WMT) was down 0.34% or 0.20 points to 59.36 in late trade.

The worst performers of the session were EI du Pont de Nemours and Company (N:DD), which fell 5.51% or 4.11 points to trade at 70.44 at the close. Chevron Corporation (N:CVX) declined 3.20% or 2.86 points to end at 86.44 and Goldman Sachs Group Inc (N:GS) was down 3.05% or 5.55 points to 176.56.

The top performers on the S&P 500 were Whole Foods Market Inc (O:WFM) which rose 8.59% to 34.02, Corning Incorporated (N:GLW) which was up 5.60% to settle at 18.68 and CSX Corporation (N:CSX) which gained 4.13% to close at 25.72.

The worst performers were Southwestern Energy Company (N:SWN) which was down 13.99% to 5.90 in late trade, Williams Companies Inc (N:WMB) which lost 10.98% to settle at 26.42 and Range Resources Corporation (N:RRC) which was down 10.33% to 22.75 at the close.

The top performers on the NASDAQ Composite were Essex Rental Corporation (O:ESSX) which rose 36.92% to 0.178, Pyxis Tankers Inc (O:PXS) which was up 30.91% to settle at 2.88 and Finisar Corporation (O:FNSR) which gained 22.25% to close at 14.23.

The worst performers were Moko Social (O:MOKO) which was down 25.53% to 0.70 in late trade, Vapor Corp (O:VPCO) which lost 30.47% to settle at 0.16 and Great Basin Scientific Inc (O:GBSN) which was down 26.59% to 0.0947 at the close.

Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2956 to 484 and 5 ended unchanged; on the Nasdaq Stock Exchange, 2245 fell and 411 advanced, while 44 ended unchanged.

Shares in Southwestern Energy Company (N:SWN) fell to 5-year lows; down 13.99% or 0.96 to 5.90. Shares in Williams Companies Inc (N:WMB) fell to 3-years lows; down 10.98% or 3.26 to 26.42. Shares in Range Resources Corporation (N:RRC) fell to 5-year lows; falling 10.33% or 2.62 to 22.75. Shares in Moko Social (O:MOKO) fell to all time lows; falling 25.53% or 0.24 to 0.70. Shares in Vapor Corp (O:VPCO) fell to all time lows; losing 30.47% or 0.07 to 0.16.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 25.59% to 24.29 a new 1-month high.

Additional stock news from Reuters at Investing.com.

Forex

EUR/USD posted modest gains on Friday erasing some of its losses from the previous session, as currency traders continued to await a likely interest rate hike by the Federal Reserve at its two-day meeting next week.

The currency pair traded between 1.0927 and 1.1031 before settling at 1.0994, up 0.0053 or 0.49% on the session. After surging by more than 3% in last Thursday's session, EUR/USD has been relatively flat in the six subsequent trading days, moving only percentage points higher. Earlier this week, the euro jumped to one-month highs against the dollar as the aftershocks of a surprising move by the European Central Bank continued to be felt. On December 3, the ECB's Governing Council spooked foreign exchange markets worldwide by only tweaking its comprehensive bond buying program on a limited basis. Many analysts expected ECB president Mario Draghi to introduce widespread easing measures at the meeting in an effort to stave off the risks of deflation.

EUR/USD likely gained support at 1.0549, the low from Dec. 2 and was met with resistance at 1.1041, the high from Dec. 9.

At next week's closely watched two-day meeting, the FOMC is expected to lift the target range on its benchmark Federal Funds Rate by 25 basis points to 0.25-0.50%. The Fed Funds Rate, the rate which institutions offer on interbank loans at the Federal Reserve Bank of New York, has remained at near-zero levels for nearly seven years since December, 2008. Almost a decade has passed since the Fed last raised the rate at a meeting in June, 2006.

On Friday, the CME Group's (O:CME) FedWatch placed the probability of a quarter-point hike on Dec. 16 at 81.4%, up from a level which hovered in the 70s before last week's relatively optimistic U.S. jobs report. The U.S. economy added 211,000 nonfarm payrolls in November, while the unemployment rate remained unchanged at 5.0%. For the year, the labor market has averaged job gains of at least 200,000 a month, far above the 100,000 threshold set by Fed chair Janet Yellen for the next year.

Yellen has continually downplayed the significance of lift-off, placing more importance on the gradual path of rate increases as the Fed normalizes monetary policy. Earlier this week, the Wall Street Journal reported that FOMC members may struggle to form a consensus on the language in Wednesday's statement regarding the pace of tightening. In September, the FOMC projected that the Fed Funds Rate would reach 1.4% in 2016 and 2.6% in 2017, according to its median forecasts.

An upward move by the Fed is viewed as bullish for the dollar, as foreign investors pile into the greenback to take advantage of higher yields.

Elsewhere, the U.S. Department of Commerce said Core Retail Sales in November increased by 0.6%, following a 0.2% increase a month earlier. The core figure strips out volatile categories such as gasoline, automobile and food sales. Separately, the Labor Department said its Producer Price Index increased by 0.3% in November, following a 0.4% decline a month earlier. The data could provide the retail industry with momentum for the final weeks of the Holiday season.

In Germany, the nation's federal statistics bureau reported that its Consumer Price Index in November ticked up 0.4%, following a 0.3% increase a month earlier. Inflation in the largest economy in the euro zone was boosted by higher costs for food and rent.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.30% to an intraday low of 97.32 before closing at 97.57. Since reaching a 12-month high at 100.60 last week, the index is down by roughly 2.5%.

CTFC Commitment of Traders

Speculators this week were were more less bullish on the dollar. Gold sentiment became more bullish bullish, while bullishness receded for oil.

cot.2015.dec.10

Gold

Gold futures inched up in range-bound trade on Friday, as investors continued to brace for a likely interest rate hike by the Federal Reserve at next week's highly anticipated meeting.

On the Comex division of the New York Mercantile Exchange, gold for February delivery traded between $1,061.90 and $1,078.50 an ounce before settling at $1,075.20, up 3.30 or 0.31% on the session. Gold hardly fluctuated at all over the week, as traders remained cautious ahead of the critical decision by the Federal Open Market Committee. After surging by more than $15 an ounce last Friday, gold failed to close by more than 0.75% in a positive or negative direction in any of the five sessions on the week. The precious metal remains near last week's six-year low when it slipped below $1,050 an ounce, erasing all of its gains from the previous three months.

Gold likely gained support at $1,046.20, the low from Dec. 3 and was met with resistance at $1,114.20, the high from Nov. 3.

At next week's closely watched two-day meeting, the FOMC is expected to lift the target range on its benchmark Federal Funds Rate by 25 basis points to 0.25-0.50%. The Fed Funds Rate, the rate which institutions offer on interbank loans at the Federal Reserve Bank of New York, has remained at near-zero levels for nearly seven years since December, 2008. Almost a decade has passed since the Fed last raised the rate at a meeting in June, 2006.

On Friday, the CME Group's (O:CME) FedWatch placed the probability of a quarter-point hike on Dec. 16 at 81.4%, up from a level which hovered in the 70s before last week's relatively optimistic U.S. jobs report. The U.S. economy added 211,000 nonfarm payrolls in November, while the unemployment rate remained unchanged at 5.0%. For the year, the labor market has averaged job gains of at least 200,000 a month, far above the 100,000 threshold set by Fed chair Janet Yellen for the next year.

Yellen has continually downplayed the significance of lift-off, placing more importance on the gradual path of rate increases as the Fed normalizes monetary policy. Earlier this week, the Wall Street Journal reported that FOMC members may struggle to form a consensus on the language in Wednesday's statement regarding the pace of tightening. In September, the FOMC projected that the Fed Funds Rate would reach 1.4% in 2016 and 2.6% in 2017, according to its median forecasts.

An upward move by the Fed is viewed as bearish for gold, which struggles to compete with high-yield bearing assets.

Elsewhere, the U.S. Department of Commerce said Core Retail Sales in November increased by 0.6%, following a 0.2% increase a month earlier. The core figure strips out volatile categories such as gasoline, automobile and food sales. Separately, the Labor Department said its Producer Price Index increased by 0.3% in November, following a 0.4% decline a month earlier. The data could provide the retail industry with momentum for the final weeks of the Holiday season.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.30% to an intraday low of 97.32. Since reaching a 12-month high at 100.60 last week, the index is down by roughly 2.5%.

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

Silver for March delivery plunged 0.195 or 1.38% to $13.90 an ounce.

Copper for March delivery gained 0.043 or 2.09% to 2.116 a pound.

Oil

U.S. crude futures fell sharply on Friday plunging below $36 a barrel for the first time in more than seven years, after a bearish report from the International Energy Agency projected that global energy markets will remain vastly oversupplied for at least the immediate near future.

On the New York Mercantile Exchange, WTI crude for January delivery traded between $35.39 and $36.84 a barrel, before settling at $35.62, down 1.14 or 3.11% on the session. With the sharp declines, U.S. crude futures traded at $35 for the first time since February, 2009, during the depths of the Financial Crisis. Experiencing one of its worst years in recent memory, crude plummeted by more than 10% over the last five days, suffering one of its most dismal weeks in 2015.

On the Intercontinental Exchange (ICE), the sell-off in brent futures was even steeper. North Brent Sea crude for January delivery wavered between $37.37 and $39.74 a barrel, before closing at $37.90, down 1.83 or 4.62% on the day. Brent futures also fell to fresh seven-year lows on Friday. Since OPEC spooked global markets by leaving its output quota unchanged at a closely-watched meeting last week, brent crude has fallen by nearly 12%.

Meanwhile, the spread between the international and U.S. benchmarks for crude stood at $2.28, below Thursday's level of $2.98 at the close of trading.

In its December oil market report, released on Friday, the Paris-based International Energy Agency (IEA) projected global demand growth in 2016 to slow considerably, widening the gulf in the supply-demand imbalance worldwide. Next year, the IEA anticipates that global demand will grow by 1.2 million barrels per day, down from its 2015 expectations for growth of 1.8 million bpd.

At the same time, the IEA expects non-OPEC production to decrease by 600,000 bpd in 2016 as high-priced U.S. shale producers continue to get squeezed out of the market from crashing oil prices. The agency anticipates that U.S. domestic output will decline by 415,000 bpd, comprising nearly 70% of the total non-OPEC declines. By comparison, global production outside of the powerful cartel surged by an estimated 2.4 million bpd in 2014, contributing to the current supply glut.

Shortly after Thanksgiving last year, OPEC rattled the energy industry with a strategic decision to leave its production ceiling above 30 million barrels per day in an effort to defend its market share. The tactic appears to be working. Since the audacious move, market share from U.S. producers has flattened while OPEC has turned market share losses into gains, according to a fourth-quarter report from the Federal Reserve Bank of Dallas.

"These trends will likely continue," the report stated. "Overall, the OPEC strategy is one of collateral damage, where all parties are losing but some can sustain more losses than others."

On Thursday, OPEC said it pumped 31.695 million barrels of crude per day in November, an increase of 230,100 from its level a month earlier. While production in Saudi Arabia fell slightly by 25,000 bpd to 10.13 million bpd last month, it was offset by a 248,000 bpd increase in output from Iraq. OPEC supply is expected to increase exponentially next year, when Iran could ramp up production by much as 1 million bpd if a slew of economic sanctions are eased against the Gulf state.

"Saudi Arabia and its Gulf allies have the least to gain from supply cuts; they enjoy significant fiscal buffers and risk losing market share to other countries if output is trimmed," the report from the Dallas Fed added. "As a consequence, OPEC will further increase its market share, while U.S. producers experience a flattening or even a decrease in the near future."

OPEC's strategy last November triggered a prolonged battle with U.S. shale producers, flooding global markets with excess supply. As a result, crude prices have fallen sharply by more than 60% over the last year.

"OPEC's decision to scrap its official production ceiling and keep the taps open is a de facto acknowledgment of current oil market reality," the IEA said in the report. "The freewheeling OPEC policy does not - for now - alter the status quo on its supply."

Oil services firm Baker Hughes (N:BHI) said Friday that U.S. oil rigs fell by 21 to 524 for the week ending on Dec. 4. The rig count fell to its lowest level since April, 2010, providing further indications of forthcoming declines in U.S. output.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.30% to an intraday low of 97.32. Since reaching a 12-month high at 100.60 last week, the index is down by roughly 2.5%.

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

Natural Gas (Thursday Report)

Natural gas futures extended gains on Thursday, after data showed U.S. natural gas supplies in storage fell more than expected last week.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended December 4 fell by 76 billion cubic feet, compared to expectations for a decline of 64 billion.

That compared with a drawdown of 53 billion cubic feet in the prior week, 51 billion cubic feet in the same week last year, while the five-year average change for the week is a decline of 65 billion cubic feet.

Total U.S. natural gas storage stood at 3.880 trillion cubic feet, 11.7% higher than levels at this time a year ago and 6.1% above the five-year average for this time of year.

Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter's unusually strong demand.

Inventories of the gas are typically built up during the warm summer months and then drawn down in the winter as cold temperatures increase demand for the fuel.

Natural gas for delivery in January on the New York Mercantile Exchange tacked on 2.5 cents, or 1.19%, to trade at $2.087 per million British thermal units during U.S. morning hours. Prices were at around $2.062 prior to the release of the supply data.

On Wednesday, natural gas shed 0.8 cents, or 0.39%, on forecasts for a warmer-than-normal start to winter due to the El Niño weather pattern.

Prices of the fuel typically rise ahead of the winter as colder weather sparks heating demand. But warmer temperatures throughout the autumn and early winter limited demand, underlining concerns over a deepening supply glut and driving prices to multi-year lows near $2 per million British thermal units at the end of October.

The heating season from November through March is the peak demand period for U.S. gas consumption.

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