by Investing.com Staff, Investing.com
At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.24%, the S&P 500 index rose 0.43%, while the Nasdaq Composite index rose 0.80%.
Despite headwinds in the form of soft economic growth figures and spotty regional manufacturing gauges, the U.S. economy is improving, especially the labor market. which boosted spirits in U.S. equities markets on Friday.
The Department of Labor reported Thursday that the number of individuals filing for initial jobless claims in the U.S. last week fell by 4,000 to 323,000, defying expectations for an increase of 8,000 to 335,000, just days after the April jobs report beat expectations.
The numbers, coupled with a string of better-than-expected earnings reports, brought out the buyers on Wall Street Friday, especially amid sentiment the Federal Reserve won’t rush to dismantle stimulus programs currently in place.
The Fed is currently running a monthly USD85 billion bond-buying program known as quantitative easing, which sends stocks rising as a side effect.
Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 1.65%, UnitedHealth Group, up 1.45%, and Cisco Systems, up 1.25%.
The Dow Jones Industrial Average’s worst performers included Caterpillar, down 1.51%, Exxon Mobil, down 1.03%, and Alcoa, down 1.02%.
European indices, meanwhile, finished higher.
After the close of European trade, the EURO STOXX 50 rose 0.44%, France’s CAC 40 rose 0.64%, while Germany’s DAX 30 finished up 0.19%. Meanwhile, in the U.K. the FTSE 100 finished up 0.49%.
The U.S. dollar extended Thursday’s gains against most major currencies into Friday after official data revealed far less individuals filed for unemployment assistance in the U.S. last week than expected.
The dollar also saw demand among investors seeking safe harbor ahead of a Group of Seven meeting of finance ministers and central bankers in the U.K. this weekend.
In U.S. trading on Friday, EUR/USD was down 0.48% at 1.2979.
The new jobs data raised expectations that the Fed could shorten the monthly USD85 billion bond-buying program known as quantitative easing, which tends to weaken the greenback .
The dollar also saw support as a meeting of G7 finance ministers kicked off, with investors eagerly awaiting hints as to when monetary stimulus programs may unwind and when fiscal reforms may take place on a global basis.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.65% at 1.5350.
In the U.K. earlier, official data revealed the trade deficit narrowed less than expected in March, coming in at GBP9.1 billion from a GBP9.2 billion deficit the previous month.
Analysts were expecting the trade deficit to narrow to GBP9.0 billion in March.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.58% at 83.26.
The dollar was also buoyed by a larger than expected federal budget surplus in April. In a report, Department of the Treasury said that U.S. federal budget balance rose to a seasonally adjusted 112.9B, from -107.0B in the preceding month.
Analysts had expected U.S. federal budget balance to rise to 106.5B last month.
The pound traded just off two-and-a-half week lows after U.K. trade data disappointed while U.S. jobs numbers beat expectations.
In U.S. trading on Friday, GBP/USD was trading at 1.5356, down 0.61%, up from a session low of 1.5314 and off from a high of 1.5458.
The pair was likely to find support at 1.5197, the low from April 23, and resistance at 1.5592, Wednesday’s high.
In the U.K. earlier, official data revealed the trade deficit narrowed less than expected in March, coming in at GBP9.1 billion from a of GBP9.2 billion deficit the previous month.
Analysts were expecting the trade deficit to narrow to GBP9.0 billion in March.
The number sent Cable falling as did better-than-expected jobless claims that hit the wire in the U.S. on Thursday.
Earlier this week, the Bank of England left interest rates unchanged at a record low 0.5% and maintained the size of its asset purchase program at GBP375 billion.
Gold prices took a nosedive in U.S. trading on Friday as investors snapped up dollar positions ahead of a Group of Seven meeting of finance ministers and central bankers taking place in the U.K. this weekend.
Uncertainty over policy stances on stimulus tools, which weaken paper currencies to spur recovery, bolstered the dollar’s safe-haven appeal.
Gold and the dollar traditionally trade inversely from one another.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were down 2.39% at USD1,433.45 a troy ounce in U.S. trading on Friday, up from a session low of USD1,418.65 and down from a high of USD1,461.15 a troy ounce.
Gold futures were likely to test support USD1,403.55 a troy ounce, the low from April 22, and resistance at USD1,475.55, Wednesday’s high.
A surging dollar sent gold falling, especially on uncertainty as to when the Federal Reserve will wind down stimulus programs.
Better-than-expected jobless claims released on Thursday also bolstered the dollar’s appeal.
Technical factors drove the selloff as well.
Elsewhere on the Comex, silver for July delivery was down 1.16% at USD23.633 a troy ounce, while copper for July delivery was up 0.40% and trading at USD3.354 a pound.
Oil prices plummeted on Friday as investors snapped up dollar positions and shunned the commodity in wake of Thursday’s soft supply data.
A firming greenback makes oil an increasingly expensive commodity in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded down 2.53% at USD93.95 a barrel on Friday, off from a session high of USD96.24 and up from an earlier session low of USD93.39.
The dollar rose as investors sought a safe and liquid venue to await a Group of Seven meeting of finance ministers and central bankers to begin.
Talk of unwinding stimulus measures gave the greenback support, as did softer-than-expected Italian industrial output numbers.
Italy reported earlier that industrial output dropped 0.8% in March after contracting 0.9% in February.
Analysts were expecting a 0.2% contraction in output at the country’s factories, mines and utilities.
The news not only strengthened the dollar but also curbed demand for oil by stoking fears Europe will demand less fuels and energy than once hoped.
U.S. inventory data released on Thursday also fueled the selloff.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 230,000 barrels in the week ending May 3, well below market expectations for an increase of 1.9 million barrels, prompting investors to conclude that demand is not keeping pace with supply.
Total U.S. crude oil inventories stood at 395.5 million barrels as of last week, the highest level since 1982.
Elsewhere on the ICE Futures Exchange, Brent oil futures for June delivery were down 2.17% at USD102.20 a barrel, up USD8.25 from its U.S. counterpart.
Natural gas prices fell on Friday as investors shorted the commodity after digesting Thursday’s bearish supply data.
Forecasts for moderate weather pushed prices down as well.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD3.933 per million British thermal units, down 1.24%.
The commodity hit a session low of USD3.914 and a high of USD4.010.
On Thursday, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended May 3 rose by 88 billion cubic feet, above expectations for an increase of 83 billion cubic feet.
Inventories rose by 30 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 69 billion cubic feet.
Total U.S. natural gas storage stood at 1.865 trillion cubic feet as of last week. Stocks were 737 billion cubic feet less than last year at this time and 99 billion cubic feet below the five-year average of 1.964 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 109 billion cubic feet below the five-year average, following net injections of 52 billion cubic feet.
Stocks in the Producing Region were 40 billion cubic feet below the five-year average of 805 billion cubic feet after a net injection of 31 billion cubic feet.
Elsewhere, investors throttled back on recent sentiments that rising temperatures typical of May will hike demand for natural gas in the country’s power plants as households and businesses crank up their air conditioning.
Updated weather forecasting models pointed to mild temperatures sticking around for much of the U.S. in the coming weeks.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June were down 1.77% and trading at USD94.68 a barrel, while heating oil futures for June delivery were down 2.01% at USD2.8775 per gallon.