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posted on 17 June 2016

Investing.com Weekly Wrap-Up 17 June 2016

Written by , Investing.com

U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.33%

U.S. stocks were lower after the close on Friday, as losses in the Healthcare, Technology and Consumer Services sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average fell 0.33%, while the S&P 500 index fell 0.33%, and the NASDAQ Composite index declined 0.92%.

The best performers of the session on the Dow Jones Industrial Average were CaterpillarInc (NYSE:CAT), which rose 1.25% or 0.94 points to trade at 75.93 at the close. Meanwhile, Walt Disney Company (NYSE:DIS) added 0.63% or 0.62 points to end at 99.00 and International Business Machines (NYSE:IBM) was up 0.62% or 0.93 points to 151.99 in late trade.

The worst performers of the session were Merck & Company Inc (NYSE:MRK), which fell 2.80% or 1.61 points to trade at 55.89 at the close. Apple Inc (NASDAQ:AAPL) declined 2.28% or 2.22 points to end at 95.33 and Visa Inc (NYSE:V) was down 1.74% or 1.36 points to 76.99.

The top performers on the S&P 500 were Transocean Ltd (NYSE:RIG) which rose 7.51% to 11.31, Chesapeake Energy Corporation (NYSE:CHK) which was up 6.24% to settle at 4.510 and Murphy Oil Corporation (NYSE:MUR) which gained 4.86% to close at 29.34.

The worst performers were Vertex Pharmaceuticals Inc (NASDAQ:VRTX) which was down 4.07% to 86.73 in late trade, Regeneron Pharmaceuticals Inc (NASDAQ:REGN) which lost 3.36% to settle at 354.21 and Linear Technology Corporation (NASDAQ:LLTC) which was down 3.25% to 46.15 at the close.

The top performers on the NASDAQ Composite were Ceres Inc (NASDAQ:CERE) which rose 72.93% to 0.3813, Globeimmune (NASDAQ:GBIM) which was up 60.98% to settle at 3.300 and Neovasc Inc (NASDAQ:NVCN) which gained 49.39% to close at 0.765.

The worst performers were Epirus Biopharmaceuticals Inc (NASDAQ:EPRS) which was down 18.43% to 0.416 in late trade, Innocoll AG (NASDAQ:INNL) which lost 18.37% to settle at 6.00 and Glycomimetc (NASDAQ:GLYC) which was down 16.69% to 6.14 at the close.

Rising stocks outnumbered declining ones on the New York Stock Exchange by 1942 to 1364 and 21 ended unchanged; on the Nasdaq Stock Exchange, 1475 fell and 1086 advanced, while 64 ended unchanged.

Shares in Regeneron Pharmaceuticals Inc (NASDAQ:REGN) fell to 52-week lows; falling 3.36% or 12.31 to 354.21. Shares in Epirus Biopharmaceuticals Inc (NASDAQ:EPRS) fell to all time lows; falling 18.43% or 0.094 to 0.416. Shares in Innocoll AG (NASDAQ:INNL) fell to 52-week lows; down 18.37% or 1.35 to 6.00.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 0.52% to 19.27.

Gold for August delivery was up 0.23% or 2.95 to $1301.35 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in July rose 4.11% or 1.90 to hit $48.11 a barrel, while the August Brent oil contract rose 4.41% or 2.08 to trade at $49.27 a barrel.

EUR/USD was up 0.47% to 1.1279, while USD/JPY fell 0.10% to 104.17.

The US Dollar Index was down 0.51% at 94.29.

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

Forex

GBP/USD rallied more than 1% on Friday, as momentum surrounding the "Leave" campaign slowed for the time being after officials suspended Brexit-related activities for a second straight day following the tragic murder of a British Parliament member.

The currency pair traded in a broad range between 1.4199 and 1.4388 before settling at 1.4207, up 1.10% on the session. With the sharp gains, the Pound Sterling enjoyed its strongest one-day move against the dollar in more than a month. At session-lows on Thursday, the pair tested 1.40, its lowest level since early-March. The Pound has still slid more than 1.25% over the last week amid mounting concerns that voters could support a referendum to leave the European Union next Thursday.

GBP/USD likely gained support at 1.3852, the low from Feb. 26 and was met with resistance at 1.4693, the high from May 27.

On Friday, a series of events ahead of next week's Brexit referendum were cancelled, as U.K. residents continued to mourn Jo Cox, a Labour Party member who was shot and stabbed to death in North Yorkshire a day earlier. Cox, who was elected to the House of Commons last year, had openly campaigned for the "Remain" camp in recent weeks. It marked the first killing of a Parliament member in two decades. Out of respect for Cox, several public opinion polls and a report by the International Monetary Fund were delayed until the weekend.

Voters in the U.K. appear to be evenly split on whether to support a departure by the U.K. from the European Union. While the "Remain" campaign held as much as a 70-30 lead several months ago, the "Leave," vote has surged ahead in several prominent polls this week. Still, the British sportsbook Betfair helped assuage concerns of a Brexit by reporting that approximately 65% of the wagers it has handled have come in for the "Remain," side. In recent weeks, British prime minister David Cameron, Federal Reserve chair Janet Yellen, IMF managing director Christine Lagarde and Bank of England governor Mark Carney have warned of the serious ramifications a Brexit could have on global financial markets. On the other end, House of Commons Leader Chris Grayling, Culture Secretary John Whittingdale and former London mayor Boris Johnson have shown support for the Leave movement.

Meanwhile, investors continued to digest the Fed's decision earlier this week to leave the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25% and 0.50%. At the same time, six members of the FOMC recommended one interest rate hike before the end of this year, up from one in March. Last December, the FOMC forecasted in its quarterly economic projections. that it could raise rates as much as four times in 2016.

St. Louis Fed president James Bullard said Friday that the U.S. central bank may only need to raise rates once over the next two and a half years, amid a historically low interest rate environment among other top central banks worldwide. By comparison, both the European Central Bank and the Bank of Japan left key interest rates in negative territory earlier this month. Bullard's comments represent a stark departure from his position less than a month ago when he argued at a speech in Singapore that keeping rates too low for an extended period could "feed into future financial instability."

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.50% to a one-week low of 94.17, before settling at 94.31. The index is down by more than 5% since early-December.

Yields on the U.S. 10-Year rose three basis points to 1.61%, bouncing off four-year lows from the previous session. Yields on the Germany 10-Year surged four basis points to 0.02%, earlier this week yields on German bunds turned negative for the first time on record.

CTFC Commitment of Traders

This week speculators turned bearish on the S&P 500, while bullishness increased for gold and the yen and bearishness increased for the euro and the British pound.

Note: This data closes on Wednesday so the last two days of trading are not reflected. The big moves in all markets today (Friday) will undoubtedly produce some shifts in trader sentiment.

cot.2016.jun.08

Gold

Gold retreated from 22-month highs on Friday amid heavy profit taking, as officials suspended Brexit campaigning for a second consecutive day following the tragic death of a Parliament member, throwing next week's closely-watched referendum into limbo.

On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded in a broad range between $1,279.50 and $1,299.15 an ounce before settling at $1,293.45, down $4.95 or 0.39% on the session. It came one session after Gold surged nearly 2% to eclipse $1,310 an ounce, hitting its highest level since August, 2014. With the mild losses, Gold halted a streak of seven-day winning streak. The precious metal has still surged more than 21% since the start of the year and is on pace for its strongest first half in more than a decade.

Gold likely gained support at $1,199.00, the low from May 31 and was met with resistance at $1,337.90, the high from July 11, 2014.

On Friday, a series of events ahead of next week's Brexit referendum were cancelled, as U.K. residents continued to mourn Jo Cox, a Labour Party member who was shot and stabbed to death in North Yorkshire a day earlier. Cox, who was elected to the House of Commons last year, had openly campaigned for the "Remain" camp in recent weeks. It marked the first killing of a Parliament member in two decades. Out of respect for Cox, several public opinion polls and a report by the International Monetary Fund were delayed until the weekend.

Voters in the U.K. appear to be evenly split on whether to support a departure by the U.K. from the European Union. While the "Remain" campaign held as much as a 70-30 lead several months ago, the "Leave," vote has surged ahead in several prominent polls this week. Still, the British sportsbook Betfair helped assuage concerns of a Brexit by reporting that approximately 65% of the wagers it has handled have come in for the "Remain," side. In recent weeks, British prime minister David Cameron, Federal Reserve chair Janet Yellen, IMF managing director Christine Lagarde and Bank of England governor Mark Carney have warned of the serious ramifications a Brexit could have on global financial markets. On the other end, House of Commons Leader Chris Grayling, Culture Secretary John Whittingdale and former London mayor Boris Johnson have shown support for the Leave movement.

Meanwhile, investors continued to digest the Fed's decision earlier this week to leave the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25% and 0.50%. At the same time, six members of the FOMC recommended one interest rate hike before the end of this year, up from one in March. Last December, the FOMC forecasted in its quarterly economic projections. that it could raise rates as much as four times in 2016.

St. Louis Fed president James Bullard said Friday that the U.S. central bank may only need to raise rates once over the next two and a half years, amid a historically low interest rate environment among other top central banks worldwide. By comparison, both the European Central Bank and the Bank of Japan left key interest rates in negative territory earlier this month. Bullard's comments represent a stark departure from his position less than a month ago when he argued at a speech in Singapore that keeping rates too low for an extended period could "feed into future financial instability."

Investors who are bullish on Gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.45% to an intraday low of 94.17, its lowest level in a week. The index is down by more than 5% since early-December.

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

Silver for July delivery plunged 0.232 or 1.32% to $17.375 an ounce.

Copper for July delivery inched up 0.002 or 0.10% to $2.050 a pound.

Oil

Crude futures halted a six-day losing streak on Friday, closing near session-highs, after shrugging off reports of a third consecutive weekly gain among U.S. oil rigs.

On the New York Mercantile Exchange, WTI crude for July delivery traded between $45.84 and $48.06 a barrel before closing at $47.98, up $1.77 or 3.83% on the session. On the Intercontinental Exchange (ICE), brent crude for August delivery wavered between $47.01 and $49.23 a barrel, before settling at $49.19, up $2.00 or 4.24% on the day. Despite the sharp gains, both the international and U.S. benchmarks of crude are each down by approximately 5% from multi-month highs hit last week.

WTI crude has gained more than 80% in value since slumping to 13-year lows at $26.05 a barrel on February 11.

On Friday afternoon, oil services firm Baker Hughes said in its weekly rig count report that U.S. oil rigs last week rose by nine to 337 for the week ending on June 10. It marked the third straight of weekly increases, the longest since last August. At the same time, the gas rig count inched up by one last week to 87, boosting the overall count by 10 to 424. The overall rig count is still down by 433 in comparison with the total from the same week last year.

Any gains in U.S. oil rigs typically provide lagging indications that production nationwide is about to increase. Over the last year, U.S. output has fallen sharply as high-cost shale producers were forced offline due to a prolonged downturn in prices. Last week, production in the U.S. fell by 29,000 barrels per day to 8.716 million barrels per day, remaining down by approximately 1 million bpd from its level 12 months ago. Last June, U.S. crude output eclipsed 9.6 million bpd to hit its highest level in more than 40 years.

Since reaching a peak of $115 a barrel in June 14, crude prices have tumbled more than 50% amid a glut of oversupply on global energy markets.

Earlier this week, analysts from Goldman Sachs Group Inc (NYSE:GS) said they viewed the price recovery in oil "as fragile," reflecting recent production delays in Canada and Nigeria, as well as larger than expected output among top producers in the Persian Gulf. While Goldman noted that not all producers will be able to ramp up production at higher prices, the analysts emphasized that some of the more capitalized ones might have the ability to come back online.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.45% to an intraday low of 94.17, its lowest level in a week. The index is down by more than 5% since early-December.

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 added to losses in North America trade on Thursday, after data showed that natural gas supplies in storage in the U.S. rose more than expected last week.

Natural gas for delivery in July on the New York Mercantile Exchange shed 2.0 cent, or 0.77%, to trade at $2.575 per million British thermal units by 14:55GMT, or 10:55AM ET. Prices were at around $2.593 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 June 10 rose by 69 billion cubic feet, above forecasts for an increase of 64 billion.

That compared with builds of 65 billion cubic feet in the prior week, 89 billion a year earlier and a five-year average of 86 billion cubic feet.

Total U.S. natural gas storage stood at 3.041 trillion cubic feet, 20.8% higher than levels at this time a year ago and 23.2% above the five-year average for this time of year.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

Meanwhile, updated weather forecasting models continued to show above-normal temperatures across most parts of the U.S. over the next two weeks.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early summer cooling demand.

Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.

Natural gas prices are up nearly 40% since falling to a 17-year low of $1.611 in early March on expectations of strong summer weather-driven demand for gas-fired electricity generation to meet air-conditioning needs.

Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.

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