by Investing.com Staff, Investing.com
U.S. stocks fell in lackluster trading on Friday as investors digested mixed economic indicators on the sidelines while awaiting fresh clues from the Federal Reserve as to when stimulus measures will begin scaling back.
Stimulus measures tend to inflate stock prices by keeping interest rates low.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.20%, the S&P 500 index fell 0.33%, while the Nasdaq Composite index fell 0.09%.
Mixed economic indicators repelled many investors from stocks on Friday, especially after consumer sentiment data missed market expectations.
The Thomson Reuters/University of Michigan’s preliminary consumer sentiment index fell to 80.0 in August from 85.1 in July. Analysts were expecting the index to rise to 85.5 this month, and the numbers edged stock prices lower as consumer spending drives about 70% of the U.S. economy.
Elsewhere, the Commerce Department reported earlier that U.S. building permits rose 2.7% to 943,000 units in July, disappointing expectations for an increase of 2.9% to 945,000 units although June’s figure was revised up to 918,000 units from 911,000.
The government added that housing starts rose 5.9% to 896,000 units in July, missing expectations for a 8.3% increase to 900,000 units. Still, June’s figure was revised up to 846,000 units from 836,000.
Not all U.S. data missed expectations.
The Bureau of Labor Statistics said in a preliminary report that nonfarm productivity rose 0.9% in the second quarter, beating expectations for a 0.6% gain after a 1.7% decline in the previous quarter.
Trading was quiet.
While the day’s data painted a picture of an economy that is improving, though doubts remained in equities markets as to when the Federal Reserve will begin tapering stimulus measures, especially its USD85 billion bond-buying program that pushes up stock prices arguably by design.
Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 1.85%, Boeing, up 0.73%, and Bank of America, up 0.70%.
The Dow Jones Industrial Average’s worst performers included Verizon, down 1.65%, Pfizer, down 1.46%, and Cisco, down 0.82%.
European indices, meanwhile, finished higher.
After the close of European trade, the EURO STOXX 50 rose 0.57%, France’s CAC 40 rose 0.75%, while Germany’s DAX 30 finished up 0.19%. Meanwhile, in the U.K. the FTSE 100 finished up 0.26%.
The dollar moved higher against most major currencies on Friday after investors digested U.S. housing and consumer sentiment data and determined that despite hit-or-miss numbers, the underlying economy is improving and will allow the Federal Reserve to taper stimulus programs soon.
Stimulus tools such as the Fed’s USD85 billion monthly bond-buying program weaken the dollar to spur recovery, and talk of their dismantling can bolster the currency.
In U.S. trading on Friday, EUR/USD was down 0.07% at 1.3336.
U.S. economic data, while mixed, still painted a picture of an economy that is improving and will soon no longer require support from Federal Reserve stimulus measures.
Meanwhile in the euro zone, consumer price inflation remained unchanged at 1.6% in July from a year ago, in line with expectations.
The bloc’s core consumer price inflation, which excludes food, energy, alcohol, and tobacco, rose 1.1% on year in July, also in line with expectations.
Separately, the European Central Bank said the current account surplus narrowed to EUR16.9 billion in June from a EUR19.5 billion surplus the previous month.
Analysts were expected the current account surplus to narrow to EUR19.0 billion in June.
The greenback, meanwhile, was up slightly against the pound, withGBP/USD down 0.04% at 1.5628.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.18% at 81.32.
Gold prices posted hefty gains on Friday on reports that physical demand is picking up, while uncertainty over the fate of monetary stimulus programs in the U.S. bolstered the precious metal’s safe haven appeal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,378.40 during U.S. afternoon hours, up 1.29%.
Gold prices hit a session low of USD1,357.10 a troy ounce and high of USD1,379.10 a troy ounce.
The December contract settled up 2.06% at USD1,360.90 a troy ounce on Thursday.
Gold futures were likely to find support at USD1,315.40 a troy ounce, Wednesday’s low, and resistance at USD1,391.35, the high from June 17.
Reports that physical demand for gold is on the rise in Asia bolstered prices on Friday amid technical buying.
Elsewhere a mixed bag of U.S. economic indicators began to fuel sentiments that the U.S. economy is recovery but at a sluggish clip, and an eventual Federal Reserve decision to begin tapering monetary stimulus measures will take place so gradually that gold will still enjoy monetary support for the long term.
Monetary stimulus programs such as the Fed’s USD85 billion in monthly asset purchases tend to weaken the dollar by driving down long-term interest rates, which makes gold an attractive venue as long as such tools remain in place even if at a lesser amount.
Gold and the dollar tend to trade inversely from one another.
Also on the Comex, silver for September delivery was up 1.57% at USD23.295 a troy ounce, while copper for September delivery was up 0.82% and trading at USD3.365 a pound.
U.S. crude prices fell on Friday after investors locked in gains stemming from Egyptian unrest and sold after digesting mixed U.S. economic indicators.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD106.99 a barrel during U.S. trading, down 0.32%.
The September contract settled up 0.45% at USD107.33 a barrel on Thursday.
Prices rose in wake of bloody clashes between supporters of Egypt’s ousted President Mohamed Morsi and Egyptian security forces, which stoked fears that tensions may spread and involve the country’s oil-rich neighbors or disrupt the flow of crude through the Suez Canal.
Profit taking kicked in as mixed indicators failed to sway investors’ confidence that the Federal Reserve remains on course to begin scaling back stimulus measures later this year.
The day’s data, while mixed, still painted a picture of an economy that is improving and will soon no longer require support from Federal Reserve stimulus measures.
Fed stimulus tools such as the U.S. central bank’s USD85 billion in monthly asset purchases weaken the greenback by driving down long-term interest rates, and a weaker dollar makes oil a nicely priced commodity.
Meanwhile on the ICE Futures Exchange, Brent oil futures for September delivery were up 0.10% at USD109.72 a barrel, up USD2.73 from its U.S. counterpart.
Natural gas prices dropped on Friday after updated weather forecasting models toned down recent calls for above-normal temperatures for portions of the central and northeastern U.S. and called for pockets of milder temperatures instead.
On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD3.370 per million British thermal units during U.S. afternoon trading, down 1.45%.
The September contract settled up 2.30% at USD3.419 per million British thermal units on Thursday.
Updated weather forecasting models said below-normal temperatures will push out above-normal mercury readings in portions of the Midwest and in the northeastern U.S. during the last week of August.
Gas prices surged in recent sessions amid reports that a heat wave will stay in place for the rest of August.
Demand for natural gas tends to wane at the country’s thermal power plants when temperatures fall, as homes and businesses throttle back their air conditioners.
Meanwhile, investors looked past Thursday’s supply report, which sent prices gaining initially.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Aug. 9 rose by 65 billion cubic feet, below market expectations for an increase of 70 billion cubic feet.
Inventories rose by 20 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 42 billion cubic feet.
Total U.S. natural gas storage stood at 3.006 trillion cubic feet as of last week. Stocks were 252 billion cubic feet less than last year at this time and 43 billion cubic feet above the five-year average of 2.963 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 99 billion cubic feet below the five-year average, following net injections of 51 billion cubic feet.
Stocks in the Producing Region were 86 billion cubic feet above the five-year average of 967 billion cubic feet after a net injection of 4 billion cubic feet.
Natural gas accounts for about a quarter of U.S. electricity generation.