Investing.com Weekly Wrap-Up 26 July 2013

by Investing.com Staff, Investing.com

U.S stocks reverse losses and gain on earnings, data; Dow rises 0.02%

U.S. stocks erased roughly 150 points of losses on Friday and finished the session higher mainly as traders bought and sold shares on earnings reports.  A better-than-expected consumer sentiment index brought in the buyers later in the session as well.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.02%, the S&P 500 index rose 0.08%, while the Nasdaq Composite index rose 0.22%.

Starbucks and Facebook released earnings that beat expectations though disappointments elsewhere pushed shares down earlier in the trading day.

Many investors remained on the sidelines before a busy next week, which will see the release of the July jobs report as well as a Federal Reserve monetary policy meeting.

Earlier Friday, the Thomson Reuters/University of Michigan consumer sentiment rose more than expected in July, hitting 85.1 from 83.9 in June. 

Analysts had expected the index to rise to 84.0 this month. 

The report also said that inflation expectations fell to 3.1% this month, from 3.3% in June, though investors took their time digesting the data before jumping into the market late in the session.

Leading Dow Jones Industrial Average performers included Intel, up 0.82%, The Travelers Companies, up 0.80%, and Walt Disney, up 0.68%.

The Dow Jones Industrial Average’s worst performers included Boeing, down 1.03%, Hewlett-Packard, down 0.91%, and JPMorgan Chase, down 0.80%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.06%, France’s CAC 40 rose 0.32%, while Germany’s DAX 30 finished down 0.65%. Meanwhile, in the U.K. the FTSE 100 finished down 0.50%.

Forex

The dollar traded steady to lower against most major currencies on Friday after improving consumer sentiment data hit the wire one day after weekly jobless claims disappointed, clouding expectations as to when the Federal Reserve will wind down stimulus programs.

Monetary stimulus programs such as the Fed’s monthly USD85 billion bond-buying program keep the dollar weak by pushing down borrowing costs.

In U.S. trading on Friday, EUR/USD was unchanged at 1.3278.

On Thursday, the Labor Department said that the number of individuals filing for initial jobless benefits last week increased by 7,000 to 343,000 surpassing expectations for a gain of 4,000 to 340,000.

Investors largely avoided the dollar and braced for next week, when the Bureau of Labor Statistics will unveil the July jobs report, which investors hope will serve as a weather vane for U.S. monetary policy.

The greenback, meanwhile, was up against the pound, with GBP/USDtrading down 0.05% at 1.5382.

The dollar was down against the yen, with USD/JPY down 1.02% at 98.28, and down against the Swiss franc, with USD/CHF trading down 0.16% at 0.9286.

In Japan, official data showed that the country’s consumer price index rose 0.4% on year in June, beating expectations for a 0.3% gain, which strengthened the yen.

On a monthly basis, Japan’s June inflation rate rose 0.2% from May, beating expectations for a 0.1% gain.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.01% at 1.0280, AUD/USD up 0.23% at 0.9266 and NZD/USD trading up 0.07% at 0.8087.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.06% at 81.77.

Gold

Gold prices fell on Friday after investors sold the commodity for profits stemming from Thursday’s rally based on soft jobless claims.

The precious metal also fell amid ongoing uncertainty as to when the Federal Reserve will begin to taper its monthly USD85 billion bond-buying program, which has sent gold rising by keeping the dollar weak.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for August traded at USD1,319.75 during U.S. afternoon hours, down 0.68%.

The August contract settled up 0.70% at USD1,328.80 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,308.75 a troy ounce, Thursday’s low, and resistance at USD1,347.85, Tuesday’s high.

Gold rose on Thursday after the Labor Department reported that the number of individuals filing for initial jobless benefits last week increased by 7,000 to 343,000 compared with expectations for a gain of 4,000 to 340,000.

The numbers weakened the dollar by keeping expectations alive the Federal Reserve will continue stimulating the economy, which was bullish for the yellow metal.

By Friday, profit takers sent prices falling as investors began preparing for next week, when the Bureau of Labor Statistics will release its July jobs report, which could provide markets with more indication as to when monetary stimulus programs may end.

Elsewhere, gold edged lower as the widely watched Thomson Reuters/University of Michigan consumer sentiment gauge beat expectations and rekindled sentiments that the economy is improving and in less need of Fed support.

Elsewhere on the Comex, silver for September delivery was down 2.10% at USD19.730 a troy ounce, while copper for September delivery was down 2.53% and trading at USD3.105 a pound.

Oil

U.S. crude oil prices moved lower on Friday amid lingering concerns that the Chinese and U.S. economies continue to battle headwinds, though better-than-expected consumer sentiment in the U.S. data curbed losses.

On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD104.50 a barrel during U.S. morning trade, down 0.97%. 

The September contract settled up 0.09%, at USD105.49 a barrel on Thursday.

Earlier this week, a preliminary reading of China’s HSBC manufacturing PMI fell to 47.7 in July from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6. A reading below 50 indicates a contraction, which continued to dampen spirits on Friday, as China is the world’s second-largest consumer of oil.

The U.S. is the world’s largest consumer of crude.

On the ICE Futures Exchange, Brent oil futures for September delivery were down 0.56% at USD107.05 a barrel, up USD2.55 from its U.S. counterpart.

Natural Gas

Natural gas prices dropped on Friday after updated weather forecasts continued to call for milder temperatures across much of the U.S. 

Milder temperatures send prices falling on sentiments that demand for the commodity will decrease at the country’s thermal power plants as fewer businesses and households crank up their air conditioning.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD3.601 per million British thermal units during U.S. morning trade, down 1.28%.

The September contract settled down 1.51%, at USD3.647 per million British thermal units on Thursday.

Weather forecasting services called for normal to even cooler-than-normal temperatures across much of central and eastern swaths of the country, which sent prices falling.

MDA Weather Services called for milder mercury readings through early August, which fueled a selloff on Friday.

Meanwhile, markets continued to digest Thursday’s supply data, though most investors tracked weather forecasts on sentiments that a recent heat wave had already been priced into trading.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended July 19 rose by 41 billion cubic feet, below market expectations for an increase of 46 billion cubic feet.

Total stocks now stand at 2.786 trillion cubic feet, down 399 billion cubic feet from last year at this time and 46 billion cubic feet below the five-year average the report said.

The report showed that in the East Region, stocks were 120 billion cubic feet below the five-year average, following net injections of 25 billion cubic feet. 

Stocks in the Producing Region were 45 billion cubic feet above the five-year average of 980 billion cubic feet after a net injection of 12 billion cubic feet.

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