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posted on 18 March 2016

Investing.com Weekly Wrap-Up 18 March 2016

Written by , Investing.com

U.S. stocks cap fifth straight positive week, its best streak since 2014

U.S. stocks closed broadly higher on Friday completing their fifth straight positive week, as the major indices continued to rebound from a historic downturn at the start of the year.

The Dow Jones Industrial Average gained 120.81 or 0.69% to 17,602.30, surging to 2016-yearly highs for the second consecutive session. With the gains, the Dow closed higher for the sixth straight session. The NASDAQ Composite index added 20.66 or 0.43% to 4,795.65, amid gains in pharmaceutical and media stocks, while the S&P 500 Composite index ticked up 0.99 or 0.44% to 2,049.58.

For the session, seven of 10 sectors closed in the green, as stocks in the Health Care, Industrials and Financials industries led. The S&P 500, which is up by approximately 10% from its lows in early-February, moved into positive territory for the year.

More than two years have elapsed since U.S. equity markets have posted a weekly winning streak as lengthy as its current rally. It also marked the first time the major indices have finished with five straight weeks of at least 1% gains since the start of the bull market in March, 2009.

Investors continued to react to a surprisingly dovish outlook from the Federal Reserve earlier this week when the U.S. central bank cut its interest rate forecast through 2018. Any rate hikes by the Fed this year are viewed as bearish for equities, as investors pile into less risky bonds and U.S. Treasuries to capitalize on higher yields.

Meanwhile, the expiration of four major asset classes in what is commonly referred to as a "quadruple witching hour," had little impact on stock prices on Friday. Quadruple witching hours, which occur on the third Friday of March, June, September and December, involve the expiration of market index futures, stock index futures, stock options and market options, usually resulting in increased volatility.

The top performer on the Dow was Goldman Sachs Group Inc (NYSE:GS), which gained 4.69 or 3.07% to 157.60. Goldman Sachs finished just ahead of JPMorgan Chase & Co (NYSE:JPM), which added 1.73 or 2.94% to 60.48. On Thursday after the bell, JP Morgan's board authorized a $1.88 billion stock buyback program through the end of the second quarter. The authorization comes on the heels of a $6.4 billion repurchase initiative last year. The worst performer Microsoft Corporation (NASDAQ:MSFT), which fell 1.17 or 2.19% to 53.49, retreating in Friday's session after releasing a preview for its new Windows 10 platform a session earlier.

The biggest gainer on the NASDAQ was Western Digital Corporation (NASDAQ:WDC), which added 3.02 or 6.57% to 49.02 in the wake of its $17.2 billion merger with SanDisk Corporation (NASDAQ:SNDK) earlier in the week. On Friday, Western Digital (NASDAQ:WDC) offered $1.5 billion in senior secured notes and another $4.1 billion in senior unsecured notes to help finance the merger. Microsoft was also the worst performer on the NASDAQ, just below TripAdvisor Inc (NASDAQ:TRIP), which fell 1.00 or 1.53% to 64.31. Shares in the Needham, Massachusetts-based travel website have crashed more than 5% over the last two sessions.

Western Digital was also the top performer on the S&P 500, just ahead of Wynn Resorts Limited (NASDAQ:WYNN), which gained 5.22 or 5.88% to 94.02. Shares in the multinational casino and resort surged to eight-month highs on Friday after its fledgling Macau division received an upgrade from analysts at Macquarie. The worst performer was Transocean which fell 0.93 or 7.94% to 10.78. Shares in the one of the world's largest offshore driller are down more than 20% over the last year.

On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,896-1,198 margin.

Additional stock news from Reuters at Investing.com with more details on U.S. markets.

Forex

The dollar remained close to five-month lows against the other major currencies on Friday, after the release of downbeat U.S. consumer sentiment data and as the Federal Reserve's latest policy statement continued to weigh on the greenback.

EUR/USD was down 0.23% at 1.1290.

In a preliminary report, the University of Michigan said its consumer sentiment index fell to 90.0 in March from 91.7 the previous month, compared to expectations for an increase to 92.2.

Sentiment on the greenback remained vulnerable after the Fed left its monetary policy unchanged on Wednesday and said that it is likely to raise interest rates twice this year - and not four times, as initially estimated.

Fed policymakers said the U.S. economy faces risks from an uncertain global economy, although moderate growth and "strong job gains" would allow it to tighten policy this year.

USD/JPY edged up 0.11% to 111.51.

Earlier Friday, the minutes of the Bank of Japan's January policy meeting showed that policymakers made two proposals, one to expand the bank's asset-buying program and another to add negative interest rates to asset purchases.

According to the minutes, the BOJ eventually decided to adopt the negative interest rate policy after several members argued the move would help prevent external factors from delaying the eradication of Japan's "deflationary mindset".

The dollar was little changed against the pound and the Swiss franc, with GBP/USD at 1.4491 and with USD/CHF at 0.9679.

Meanwhile, the Australian and New Zealand dollars were weaker, with AUD/USD down 0.52% at 0.7607 and with NZD/USD declining 0.74% to 0.6798.

USD/CAD added 0.14% to 1.2996, off Thursday's five-month low of 1.2941.

Statistics Canada reported on Friday that retail sales increased by 2.1% in January, exceeding expectations for a 0.6% gain.

Core retail sales, which excludes automobiles, rose 1.2% in January, compared to expectations for a 0.4% uptick.

A separate report showed that Canada's consumer price index rose 0.2% last month, disappointing expectations for a 0.4% gain. Year-on-year, consumer prices increased by 1.4% in February, compared to expectations for a 1.5% rise.

Core CPI, which exlude the eight most volatile items, rose by 0.5% last month, in line with expectations, after a 0.3% uptick in January.

The commodity-related loonie remained supported as oil prices moved back above $40 a barrel amid fresh hopes for a potential production cut by major oil producers.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.20% at 94.97, still close to a five-month low of 94.61 hit overnight.

CTFC Commitment of Traders

Special note: This is the report from last week. There was no Commitment of Traders report from Investing.com this week.

Speculators were more bullish on oil, gold, copper and the Japanese yen, while becoming more bearish on the euro and the British pound. Bearishness on the S&P 500 increased this week. Bullishness on the Australian dollar increased.

Note: This data closes on Wednesday so the last two days of trading are not reflected.

cot.2016.mar.09

Gold

Gold futures retreated on Friday amid heavy profit taking, after soaring as much as $50 an ounce over the previous two sessions following dovish comments from the Federal Reserve on the timing of future interest rate hikes earlier in the week.

On the Comex division of the New York Mercantile Exchange, gold for April delivery traded between $1,248.60 and $1,267.60 an ounce before settling at 1,252.20, down 12.80 or 1.01% to 1,252.20. It came one day after gold surged nearly 2.5%, enjoying its strongest one-day move on the month. For the week, gold closed slightly lower during a volatile, choppy period of trading. Since hitting 13-month highs late last week, gold has closed lower in five of the last six sessions.

Nevertheless, the precious metal is still up by more than 17% since the start of the year and is on pace for its best opening quarter in 30 years.

Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.

Metal traders could be looking forward to a quiet weekend, following a volatile stretch spurred by key interest rate decisions from four of the world's top central banks over the last 10 days. On Wednesday, the Federal Open Market Committee (FOMC) sent the dollar spiraling to five-month lows against the euro, by lowering its interest rate forecast through 2018. Citing increased global financial and economic risks and a soft inflation outlook, the Fed held the target range on its benchmark Federal Funds Rate at 0.25-0.50% for the second consecutive meeting. More importantly, the U.S. central bank slashed its year-end projection for the Fed Funds Rate to 0.88%, signifying two rate hikes for the remainder of the year.

After raising short-term interest rates in December for the first time in nearly a decade, the FOMC said in its median forecasts that it could hike rates as much as four times in 2016. Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high yield bearing assets in periods of rising rates.

Elsewhere, the Dow Jones Industrial Average rose steadily on Friday to reach fresh 2016 yearly highs. U.S. stocks are on pace for their fifth consecutive weekly gain, their longest winning streak in two years. The massive rally in global equities has dampened gold's appeal as safe-haven asset.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.30% to an intraday high of 95.14.

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

Silver for May delivery plunged 0.268 or 1.67% to 15.765 an ounce.

Copper for May delivery lost 0.009 or 0.37% to 2.283 a pound.

Oil

U.S. Crude futures surged to fresh 2016 yearly highs on Friday before paring gains in U.S. afternoon trading, after reports indicated that U.S. oil rigs rose last week for the first time in three months providing signals that domestic production could be on the verge of breaking out.

On the New York Mercantile Exchange, On the New York Mercantile Exchange, WTI crude for April delivery traded in a broad range between $39.52 and $41.20 a barrel, before settling at $39.60, down 0.60 or 1.49% on the session. At session-highs, U.S. crude futures hit their highest level since the first week of December. Since plummeting to 13-year lows in mid-February at $26.05 a barrel, WTI crude has rebounded approximately 40%.

On the Intercontinental Exchange (ICE), brent crude for May delivery wavered between $41.08 and $43.53 a barrel, before closing at $41.70, down 0.34 or 0.82% on the session. North Sea crude futures have also rallied sharply over the last month and a half after falling below $30 a barrel for a single session in mid-February.

Crude fell mildly on Friday afternoon after oil services firm Baker Hughes said U.S. oil rigs rose by one to 387 for the week ending March. 11, halting a 12-week streak of weekly declines. At the same time, the combined rig count fell to 476 last week, as four gas rigs went offline. The total amount of oil and gas rigs throughout the U.S. fell to its lowest level in more than 65 years for the second consecutive week.

Major reductions in oil rigs typically provide lagging indications that output is about to level off. Last week, production nationwide fell by 10,000 barrels per day to 9.068 million bpd, its lowest level since November, 2014. U.S. output is considerably below June highs of 9.604 million bpd, when it surged to its highest level in more than 40 years.

Despite the rally over the last five weeks, crude prices are still down by more than 60% from their peak of $115 a barrel in June, 2014. U.S. crude has also fallen more than 40% over the last 15 months since OPEC roiled global energy markets with a strategic decision to ramp up production in an effort to regain market share.

Earlier this week, Qatar confirmed that OPEC and Non-OPEC members will resume discussions in mid-April in Doha in their latest attempt to stabilize oil prices. The meeting will commence weeks after Saudi Arabia, Russia and two other OPEC members agreed on a deal in principle to freeze production at their respective levels from January.

Elsewhere, the Dow Jones Industrial Average rose steadily on Friday to reach fresh 2016 yearly highs. U.S. stocks are on pace for their fifth consecutive weekly gain, their longest winning streak in two years. The massive rally in global equities bolstered oil prices, as a host of top energy stocks approached three and a half month highs on Friday.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.30% to an intraday high of 95.14.

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

Natural Gas (Thursday Report)

U.S. natural gas futures turned lower in North American trade on Thursday, reversing gains after data showed U.S. natural gas supplies in storage fell less than expected last week.

Natural gas for delivery in April on the New York Mercantile Exchange shed 0.7 cents, or 0.37%, to trade at $1.861 per million British thermal units by 14:32GMT, or 10:32AM ET. Prices were at around $1.882 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 March 11 declined by just 1 billion cubic feet, compared to expectations for a fall of 2 billion.

That compares with draws of 57 billion cubic feet in the prior week, 43 billion cubic feet in the same week last year and a five-year average of around 71 billion.

Total U.S. natural gas storage stood at 2.478 trillion cubic feet, 40.2% higher than levels at this time a year ago and 32.5% above the five-year average for this time of year.

Some market experts worry there may be too much gas left in storage at the end of March when utilities traditionally start injecting the fuel back into storage for the next winter.

A day earlier, natural gas futures rose 1.7 cents, or 0.92%, as a recovery from 17-year lows continued.

Prices have climbed for nine of the past ten days, rebounding more than 15% since falling to a 17-year low of $1.611 on March 4 as a failure to break below key support levels prompted market players to cover short positions amid bullish chart signals.

Despite recent gains, natural gas futures are down nearly 17% so far this year as weak winter heating demand, near-record production and record-high storage levels dragged down prices.

Natural gas prices have been on a downward trend since early 2014, as natural gas producers, especially shale drillers, pulled near record amounts of the fuel out of the ground.

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