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posted on 15 July 2016

Investing.com Weekly Wrap-Up 15 July 2016

Written by , Investing.com

U.S. stocks mixed as Dow posts record closing high for 4th straight day

U.S. stocks were mixed on Friday remaining in near-record territory, as a bevy of robust economic data in June offset subdued earnings from Wells Fargo(NYSE:WFC) and Citigroup Inc (NYSE:C), while travel stocks weighed in response to the Nice truck attack.

The Dow Jones Industrial Average gained 10.14 or 0.05% to 18,516.55, closing at all-time record highs for the fourth consecutive session. The Dow reached session-highs of 18,557.43 late on Friday afternoon, also hitting a record-high for the fourth straight day. While the S&P 500 Composite index also set a fresh all-time intra-session high at 2,164.75, the S&P pared gains to close at 2,161.74, down 2.01 or 0.09%. Had the S&P 500 closed higher on Friday, the index would have posted all-time closing highs in five straight sessions over a single week, a feat last achieved in March, 1998.

On the S&P 500, six of 10 sectors closed in the green as stocks in the Utilities and Basic Materials industries led. Stocks in the Consumer Services sector lagged, falling more than 0.50% on the session despite the release of strong retail sales data on Friday. TheNASDAQ Composite index also fell slightly on Friday, losing 4.49 or 0.09% to close at 5,029.59.

Shares in Wells Fargo and Citigroup, two of the most prominent banks on Wall Street, closed lower in Friday's session after revenues moved lower in the second quarter. Wells Fargo, a San Francisco-based bank, reported earnings of $5.56 billion or 1.01 per share, down from $5.72 billion or 1.03 per share during the same period last year. It came amid a 17% decline in mortgage lending and continued weakness in energy loans over the period. Citigroup, meanwhile, saw its earnings fall from $4.85 billion to $4 billion, while its revenues slumped to $17.47 billion, down by 10% from the second quarter of 2015.

The top performer on the Dow was Caterpillar Inc (NYSE:CAT), which gained 0.64 or 0.80% to 80.70. Caterpillar (NYSE:CAT) finished just above GE, which added 0.25 or 0.77% to 32.88. Earlier this week, the multinational conglomerate acquired Biosafe Group, a Switzerland-based company which specializes in cell bioprocessing systems for cell therapy industries. The transaction is expected to help catapult General Electric Company (NYSE:GE) into the cell therapy market, as its health care arm pursues a cure for cancer.

The worst performer was Nike Inc (NYSE:NKE), which fell 0.62 or 1.06% to 57.87. Nike closed just below Goldman Sachs Group Inc (NYSE:GS), which lost 0.90 or 0.55% to 161.64. The financial sector lost some momentum on Friday, one day after JPMorgan Chase & Co (NYSE:JPM) buoyed Wall Street with stronger than expected quarterly earnings.

The biggest gainer on the NASDAQ was Biomarin Pharmaceutical Inc (NASDAQ:BMRN), which added 2.93 or 3.29% to 91.96. It came amid a large inflow of buy-side purchases in the San Rafael, California biotech company due to speculation of a potential merger with Swiss drug company Roche. Biomarin entered Friday's session down approximately 5% on the week. The worst performer was Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), which fell 1.59 or 3.72% to 41.18 to end Friday's as the biggest laggard on the NASDAQ for the second straight day. Shares in the popular cruise line continued to fall two days after NCL subsidiary Regent Seven Seas unveiled its latest ship in Monaco. The cruiser, which Regent has nicknamed "The Explorer," is being billed by the company as the most luxurious cruise ship "ever built."

Investors await the release of numerous second quarter reports among large-cap industrials and tech companies next week for indications on whether the NASDAQ can remain near the 5,000 level on a long-term basis.

On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,616-1,358 margin.

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

Forex

USD/TRY rose as much as 5% on Friday evening surging to its highest level since late-January after Turkey's prime minister indicated that military leaders have conducted the initial stages of an apparent coup.

Speaking exclusively with Turkish television network NTV, prime minister Binali Yildrim said military officers engaged in an illegal action on Friday night, but refused to characterize the attempt as a coup. Shortly after, a military group announced on national television that it had seized control of the country, as soldiers blocked traffic on Istanbul's Bosphorus Bridge. Meanwhile, Turkey president Recep Erdogan attempted to drum up support among the public, telling CNN Turk that the coup attempt will not succeed and that the plotters of the takeover will "pay a heavy price."

"There is no power higher than the power of the people," Erdogan said, via Facetime. "The judiciary will swiftly respond to this attack."

The U.S. Dollar soared to an intraday-high of 3.0497 against the Turkish Lira, before falling back slightly to 3.0137, up 4.71% on the session. The dollar continued to gain strength versus the Lira late on Friday night, as Turkish citizens flooded ATMs in a massive run on the banks. At the same time, investors piled into a host of safe-haven assets, as Gold rose 0.43% to $1,337.90, while the U.S. 10-Year fell to 1.558% erasing some of its earlier gains. The S&P 500 Futures Fund fell by 0.21% to 2,152.75 and the iShares MSCI Turkey ETF, a $364 million fund that tracks top Turkish equities, plunged by more than 5.2% to 39.40 in after-hours trading.

Earlier, Turkey media outlets reported that an attempted coup broke out around 21:00 local time (2:00 EST) after two F-16s were spotted at low altitude flying over the Parliament building in Ankara. In addition, military officers reportedly gained control of airports in Istanbul and Ankara, preventing landings in both major cities.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.65% to an intraday high of 96.70, extending earlier gains. The index has still declined by approximately 3% since early-December.

There have been at least three attempts by the military to take over the government since 1960, the last coming in 1980. In 1993, former Turkey president Turgut fizal was reportedly assassinated in the midst of a prolonged Turkish-Kurdish conflict, which included an alleged coup attempt by the Turkey military.

CTFC Commitment of Traders

This week bearishness increased on the pound and euro. Bullishness also deceased for gold, the yen and crude oil.

Note: This data closes on Wednesday so the last two days of trading are not reflected. There were was very little change in investor sentiment this week.

cot.2016.jul.06

Gold

Gold closed relatively flat on Friday, despite a surging Dollar, as subdued consumer inflation data last month did little to dissuade dovish sentiments for an extend period of accommodative monetary policy from the Federal Reserve.

On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,322.56 and $1,336.50 before settling at $1,327.85, down 4.45 or 0.33% on the session. After surging to 28-month highs last week, Gold has retreated over the last seven sessions, losing approximately 2% in value over the span holding near two-week lows. With the declines, Gold finished with its first negative week since early-June. Still, the precious metal is on track for one of its strongest years on record after soaring roughly 25% year to date.

Gold likely gained support at $1,323.50, the low from June 8 and was met with resistance at $1,391.40 the high from March 17, 2014.

On Friday morning, the U.S. Labor Department said its Consumer Price Index rose by 0.2% in June, amid firming price pressures in services, transportation and medical care. The gains fell slightly below analysts' expectations of a 0.3% increase, one month after rising by 0.2% in May. On a yearly basis, consumer prices rose by 1.0%, one month after rising by an upwardly revised 1.1%.

The Core CPI Index, which strips out volatile food and energy prices, increased by 0.2% in line with consensus estimates. At the same time, Core CPI over the last 12 months has shot up by 2.3%, slightly above annual gains of 2.2% in May. Energy prices in June jumped by 1.3%, echoing similar gains over the prior four months. The relatively soft inflation figures may do little to compel dovish members of the Federal Open Market Committee (FOMC) to approve a short-term interest rate hike in the coming months.

On Thursday, St. Louis Fed president James Bullard, Atlanta Fed president Dennis Lockhart and Dallas Fed president Rob Kaplan all reiterated that the FOMC should take a patient approach with the timing of future rate increases.

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 rate environments.

Elsewhere, gold prices were underpinned by favorable data in China after the government reported second quarter GDP growth of 6.7%, in line with consensus estimates and unchanged from the previous quarter. For the quarter, retail sales and industrial output rose 10.6% and 6.2% respectively, outweighing declines of 2.8% in fixed asset investment growth. In the wake of the slowest economic growth in China over the last two decades, economic conditions this year in the world's second-largest economy easing investors' concerns on a potential collapse.

China is the world's largest producer of gold and the second-largest consumer of the yellow metal behind India.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.55% to an intra-session high of 96.69, amid strong retail sales and industrial production data. The index has still declined by approximately 3% since early-December.

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

Silver for September delivery fell 0.180 or 0.89% to $20.142 an ounce. Last week, the front month contract for silver futures surged above $21.20 an ounce to hit fresh two-year highs.

Copper for September delivery inched down 0.009 or 0.40% to 2.234 a pound.

Oil

Crude futures ticked up on Friday, capping a volatile week with another choppy session, as the oil rig count in the U.S. moved higher for a third consecutive week.

On the New York Mercantile Exchange, WTI crude for August delivery traded between $45.05 and $46.30 a barrel before closing at $45.95, up $0.27 or 0.55% on the session. On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $46.66 and $48.05 a barrel, before settling at $47.56 or 0.20 or 0.42% on the day.

Crude ended the week with back-to-back winning sessions, after plunging 4% on Wednesday following a lower than expected supply draw in the U.S. last week. For the week, both the international and U.S. benchmarks of crude closed slightly higher.

On Friday, oil services firm Baker Hughes reported that U.S. oil rigs rose by six to 357 for the week ending on July 8, increasing for the sixth time over the last seven weeks. Despite the continued gains, oil rigs throughout the U.S. are still down by 281 over the last 12 months. The total rig count increased by six to 447, as gas rigs inched up by 1 to 90. During the first week of June, the overall count moved higher for the first time in 2016 ending a 41-week drought.

Elsewhere, oil prices also received a boost by favorable data in China after the government reported second quarter GDP growth of 6.7%, in line with consensus estimates and unchanged from the previous quarter. For the quarter, retail sales and industrial output rose 10.6% and 6.2% respectively, outweighing declines of 2.8% in fixed asset investment growth. In the wake of the slowest economic growth in China over the last two decades, economic conditions this year in the world's second-largest economy easing investors' concerns on a potential collapse.

At the same time, refinery processing in China last month spiked 3.2% to 45.08 million tons or nearly 11 million bpd, according to the nation's National Bureau of Statistics. Still, China's oil production over the first half plunged 4.6% on an annual basis dropping to its lowest level in six years. China consumes approximately 9.4 million barrels of oil per day, second in the world below the U.S.

Elsewhere, the U.S. House Intelligence Committee declassified 28 pages from a congressional inquiry into the September 11 attacks. Some analysts expressed concern in recent weeks that the release could fracture the relationship between the U.S. and Saudi Arabia in the energy trade. White House officials said on Friday that the reports show no evidence of a role from the Saudi government in helping coordinate the attacks.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.55% to an intra-session high of 96.69, amid strong retail sales and industrial production data. The index has still declined by approximately 3% 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 edged higher in North America trade on Thursday, despite data showing that natural gas supplies in storage in the U.S. rose more than expected last week.

Natural gas for delivery in August on the New York Mercantile Exchange inched up 1.3 cents, or 0.47%, to trade at $2.750 per million British thermal units by 13:34GMT, or 9:34AM ET. Prices were at around $2.744 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 8 rose by 64 billion cubic feet, above forecasts for an increase of 59 billion.

That compared with builds of 39 billion cubic feet in the prior week, 98 billion a year earlier and a five-year average of 77 billion cubic feet.

Total U.S. natural gas storage stood at 3.243 trillion cubic feet, 15.6% higher than levels at this time a year ago and 18.1% 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.

Futures are up nearly 45% since late May as expectations have grown that hot summer weather will lead to heavy 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.

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