Investing.com Weekly Wrap-Up 01 February 2012

Closing the Week with Investing.com

by Investing.com Staff, Investing.com

U.S. stock prices soared to levels not seen since late 2007 on Friday after January’s jobs report met expectations while consumer sentiment data beat market forecasts.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 1.08%, the S&P 500 index was up 1.01%, while the Nasdaq Composite index rose 1.18%.

The U.S. Bureau of Labor Statistics reported earlier that the economy added a net 157,000 jobs in January, roughly in line with expectations for a gain of 160,000.

December’s numbers were revised to 196,000 from 155,000, while November’s figures were revised to 247,000 from 161,000.

The headline unemployment rate rose to 7.9% from 7.8% in December.

Elsewhere, the Thomson Reuters/University of Michigan’s final reading of its consumer sentiment index improved to 73.8 in January from 71.3 the previous month, beating expectations for a reading of 71.5.

Separately, the Institute of Supply Management said that its manufacturing purchasing managers’ index rose to 53.1 last month from 50.2 in December, well above expectations for a rise to 50.6.

Adding to the rally were continued expectations for the Federal Reserve will make no change to its monthly USD85 billion bond-buying program, a stimulus tool known as quantitative easing that pushes up stock prices and weakens the dollar as side effects.

Leading Dow Jones Industrial Average performers included Bank of America, up 3.45%, United Technologies up 2.58%, and Verizon Communications, up 2.16%.

The Dow Jones Industrial Average’s worst performers included Merck, down 3.33%, Hewlett-Packard, down 0.30%, and Exxon Mobil, which was up 0.09%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.26%, France’s CAC 40 rose 1.10%, while Germany’s DAX 30 finished up 0.74%. Meanwhile, in the U.K. the FTSE 100 finished up 1.12%.

Forex

The dollar weakened against most major currencies on Friday after the U.S. January jobs report largely met expectations, while solid consumer sentiment figures also enticed investors out of the safe-haven greenback.

In U.S. trading on Friday, EUR/USD was up 0.64% at 1.3665.

The U.S. Bureau of Labor Statistics reported earlier that the economy added a net 157,000 jobs in January, roughly in line with expectations for a gain of 160,000.

December’s numbers were revised to 196,000 from 155,000, while November’s figures were revised to 247,000 from 161,000.

The headline unemployment rate rose to 7.9% from 7.8% in December.

Investors were bracing for a possible disappointing jobs report earlier this week, and the figures boosted spirits in markets worldwide, fueling appetite for risk that came at the dollar’s expense.

The improved consumer sentiment and manufacturing PMI reports released Friday also buoyed the market.

Meanwhile in Europe, the Markit research group earlier reported that Spain’s manufacturing PMI rose to 46.1 in January from a reading of 44.6 in December, beating expectations for an improvement to 45.5, while the eurozone’s manufacturing PMI rose to 47.9 in January from 47.5, beating expectations for the index to remain unchanged.

The dollar also fell after official data revealed that the eurozone’s unemployment rate remained unchanged at 11.7% in December, compared to expectations for a rise to 11.9%.

Elsewhere, the eurozone’s preliminary consumer price index slipped to an annualized rate of 2.0% in January from 2.2% the previous month. Analysts had expected inflation to remain unchanged last month.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.92% at 1.5712.

Earlier Friday, the Markit research group reported that the U.K. manufacturing purchasing managers’ index fell to 50.8 in January from 51.2 in December, outpacing analysts’ calls for a decline to 51.0.

The pound slid amid an otherwise risk-on trading day on sentiments U.K. recovery may be waning.

Data last week revealed that the U.K. economy contracted 0.3% in the fourth quarter, putting Britain on track for a triple-dip recession.

The dollar rose against the yen, with USD/JPY trading up 1.15% at 92.77 and was down against the Swiss franc, with USD/CHF trading down 0.37% at 0.9068.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD trading flat 0.9974, AUD/USD down 0.14% at 1.0412 and NZD/USD trading up 0.76% at 0.8454.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 79.12.

The pound fell against the dollar on Friday after weak U.K. manufacturing data fueled growing concerns that the economy is facing strengthening headwinds.

In U.S. trading on Friday, GBP/USD was trading at 1.5714, down 0.91%, up from a session low of 1.5713 and off from a high of 1.5879.

The pair was likely to find support at 1.5675, Monday’s low, and resistance at 1.5879, the session high.

The pound slid amid an otherwise risk-on trading day on sentiments U.K. recovery may be waning.

The pound was down against the euro and up against the yen, with EUR/GBP trading up 1.61% at 0.8700 and GBP/JPY up 0.17% at 145.68.

Gold

Gold prices rose on Friday after U.S. unemployment data came close to meeting expectations, while consumer sentiment figures surprised many market participants.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.65% at USD1,672.85 a troy ounce in U.S. trading on Friday, up from a session low of USD1,660.85 and down from a high of USD1,682.85 a troy ounce.

Gold futures were likely to test support USD1,660.85 a troy ounce, the session low, and resistance at USD1,684.35, Wednesday’s high.

The euro brought gold prices up with it after official data revealed that the eurozone’s unemployment rate remained unchanged at 11.7% in December, compared to expectations for a rise to 11.9%.

Meanwhile on the Comex, silver for March delivery was up 1.85% and trading at USD31.932 a troy ounce, while copper for March delivery was up 1.39% and trading at USD3.784 a pound.

Oil

Crude oil futures were flat to lower in U.S. trading on Friday as investors shrugged off positive U.S. data.

A suicide bombing at the U.S. embassy in Turkey and an explosion on the headquarters at Mexico’s state-owned oil company Pemex kept investors on the sidelines digesting possible fallout scenarios.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at USD97.45 a barrel on Friday, down 0.04%, off from a session high of USD98.13 and up from an earlier session low of USD96.55.

Investors sold oil for profits on Friday, taking advantage of several days of gains despite solid data out of the U.S., which saw rather muted reactions in energy markets.

Events in Turkey, Mexico and Syria concerned many investors and pushed them to the sidelines.

Elsewhere on the ICE Futures Exchange, Brent oil futures for March delivery were up 1.02% at USD116.72 a barrel, up USD19.27 from its U.S. counterpart.

Natural Gas

Natural gas futures extended Thursday’s losses into Friday as investors sold after supply data revealed supplies fell less than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD3.302 per million British thermal units, down 1.11%.

The commodity hit a session low of USD3.288 and a high of USD3.387.

Prices continued a two-day slide after the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Jan. 25 fell by 194 billion cubic feet, compared to expectations for a drop of 206 billion cubic feet.

Inventories fell by 149 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 178 billion cubic feet.

Total U.S. natural gas storage stood at 2.802 trillion cubic feet as of last week. Stocks were 202 billion cubic feet less than last year at this time and 304 billion cubic feet above the five-year average of 2.498 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 102 billion cubic feet above the five-year average, following net withdrawals of 129 billion cubic feet.

Stocks in the Producing Region were 153 billion cubic feet above the five-year average of 860 billion cubic feet after a net withdrawal of 47 billion cubic feet.

Meanwhile, natural gas traders continued to closely track weather forecasts for the next few weeks in an attempt to gauge the strength of winter heating demand.

Weather services continued to call for a warming trend to settle in for much of the central and eastern reaches of the country.

Natural gas futures are very sensitive to weather reports in the U.S. winter.  The U.S. heating season running from November through March sees peak demand for gas.

About half of U.S. households use gas for heating purposes, according to Energy Department data.