Investing.com Weekly Wrap-Up 12 July 2013

by Investing.com Staff, Investing.com

U.S stocks gain on earnings, Fed uncertainty weighs; Dow up 0.02%

U.S. stocks finished Friday higher after second-quarter earnings out of the financial sector beat expectations, though remaining uncertainty as to when the Federal Reserve will scale back stimulus measures hampered gains.

Stimulus programs such as the Fed’s monthly USD85 billion bond-buying program push up stocks by keeping interest rates low.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.02%, the S&P 500 index ended up 0.31%, while the Nasdaq Composite index rose 0.61%.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.02%, the S&P 500 index ended up 0.31%, while the Nasdaq Composite index rose 0.61%.

U.S. financial institutions JPMorgan Chase & Co. and Wells Fargo & Co. reported earnings earlier that beat Wall Street expectations, which sent stock prices rising.

Wells Fargo reported earnings of USD0.98 a share, beating forecasts for USD0.93 a share, due in part to a stronger housing market.

JPMorgan reported earnings of USD1.60 a share, well above consensus forecasts for USD1.44 a share.

Monetary uncertainty dampened the rally, however.

Fed Chairman Ben Bernanke said Wednesday evening that economic data suggest that the U.S. economy still requires highly accommodative monetary policies, though on Friday, Federal Reserve Bank of Philadelphia President Charles Plosser said such policies should begin to wind down this year:

“The first step is to wind down our asset purchases by the end of the year in a gradual and predictable manner. As I said, I see little if any benefit from these purchases, and growing costs.”

Also dampening stock gains, logistics giant UPS earlier cut its 2013 earnings forecasts on concerns the U.S. economy still battles headwinds.

Leading Dow Jones Industrial Average performers included Bank of America, up 1.85%, American Express, also up 1.85%, and The Travelers Companies, up 1.81%.

The Dow Jones Industrial Average’s worst performers included Boeing, down 4.59%, Verizon Communications, down 1.52%, and General Electric, down 0.75%.

European indices, meanwhile, finished mixed. After the close of European trade, the EURO STOXX 50 fell 0.24%, France’s CAC 40 fell 0.36%, while Germany’s DAX 30 finished up 0.66%. Meanwhile, in the U.K. the FTSE 100 finished up 0.02%.

Forex

The dollar rose against most major currencies on Friday after lackluster data in the U.S. and Europe sent investors seeking safe-haven dollar positions.

Federal Reserve Chairman Ben Bernanke said earlier this week that dollar-weakening stimulus programs will stay in place for the foreseeable future, though investors sought out the dollar on sentiments that ultra-loose monetary policies will still wind down this year and end in 2014.

Stimulus programs such as the Fed’s monthly USD85 billion bond-buying program weaken the dollar to spur recovery.

In U.S. trading on Friday, EUR/USD was down 0.27% at 1.3060.

Euro zone industrial production fell 0.3% in May, according to official data, surpassing market calls for a 0.2% decline after a 0.5% increase the previous month.

The numbers pressured the euro lower, as the European Central Bank has suggested that interest rates may remain at their currently low levels or possible fall even further, which gave the dollar room to rise.

The greenback was up against the pound, with GBP/USDtrading down 0.54% at 1.5102.

The dollar was down against the Swiss franc, with USD/CHF trading down 0.07% at 0.9463.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.23% at 1.0392, AUD/USD down 1.40% at 0.9060 and NZD/USD trading down 0.80% at 0.7790.

In U.S. trading on Friday, USD/JPY was trading at 99.41 up 0.44%, up from a session low of 98.68 and off a high of 99.70.

The pair was likely to find resistance at 99.70, the earlier high, and support at 98.28, Thursday’s low.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.32% at 83.15.

Gold

Gold prices fell on Friday after investors locked in gains stemming from Federal Reserve Chairman Ben Bernanke’s dovish comments made earlier this week and sold the commodity for profits.

Gold prices shot up earlier this week after Bernanke said ultra-loose monetary policies, including the Fed’s monthly USD85 billion asset-purchasing program, will stay in place for the foreseeable future.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 0.33% at USD1,275.65 a troy ounce in U.S. trading on Friday, up from a session low of USD1,266.55 and down from a high of USD1,287.05 a troy ounce.

Gold futures were likely to find support at USD1,214.55 a troy ounce, Monday’s low, and resistance at USD1,297.05, Thursday’s high.

Elsewhere on the Comex, silver for September delivery was down 0.82% at USD19.793 a troy ounce, while copper for September delivery was down 0.78% and trading at USD3.153 a pound.

Oil

Crude prices rose on Friday after second-quarter earnings in the U.S. financial sector beat expectations and pointed to an economy that continues to recover and will demand more fuel and energy going forward.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded up 0.78% at USD105.73 a barrel on Friday, off from a session high of USD105.85 and up from an earlier session low of USD104.38.

U.S. financial institutions JPMorgan Chase & Co. and Wells Fargo & Co. reported earnings earlier that beat Wall Street expectations, which sent crude prices rising on sentiments U.S. economic recovery continues. The U.S. is the world’s largest consumer of crude oil.

Healthy supply data kept prices up as well.

The Energy Information Administration reported earlier this week that U.S. crude oil inventories fell by 9.9 million barrels in the week ended July 5, blowing past expectations for a decline of 3.3 million barrels.

The report also showed that total motor gasoline inventories decreased by 2.6 million barrels, confounding expectations for an increase of 1.2 million barrels.

Stimulus tools such as the Fed’s monthly USD85 billion bond-buying program weaken the greenback to spur recovery, which makes oil an attractive asset on dollar-denominated exchanges.

On the ICE Futures Exchange, Brent oil futures for August delivery were up 0.83% at USD108.63 a barrel, up USD2.90 from its U.S. counterpart.

Natural Gas

Natural gas prices rose on Friday after updated weather forecasts called for above-normal temperatures for most of the U.S..

In the New York Mercantile Exchange, natural gas futures for delivery in August traded at USD3.667 per million British thermal units, up 1.48%.

The commodity hit a session low of USD3.601 and a high of USD3.680.

In the U.S., MDA Weather Services predicted earlier that above-normal temperatures will settle in for much of the lower 48 states through the end of next week, which sent natural gas prices gaining.

Rising summer temperatures boost demand for gas-fired electricity to cool homes and businesses.

Meanwhile, markets continued to digest supply data released Thursday that initially sent prices falling.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended July 5 rose by 82 billion cubic feet, broadly in line with market expectations.

Inventories rose by 34 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 74 billion cubic feet.

Total U.S. natural gas storage stood at 2.687 trillion cubic feet as of last week. Stocks were 443 billion cubic feet less than last year at this time and 22 billion cubic feet below the five-year average of 2.709 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 89 billion cubic feet below the five-year average, following net injections of 53 billion cubic feet.

Stocks in the Producing Region were 33 billion cubic feet above the five-year average of 965 billion cubic feet after a net injection of 27 billion cubic feet.

Natural gas accounts for about a quarter of U.S. electricity generation.