Investing.com Weekly Wrap-Up 11 October 2013

by Investing.com Staff, Investing.com

U.S. stocks gain on optimism for D.C. stalemate end; Dow rises 0.73%

U.S. stocks rose on Friday over hopes talks between the White House and Congress will lead to a spending package needed to fund the government and put to rest concerns the country will hit its debt ceiling and risk default.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.73%, the S&P 500 index rose 0.63%, while the Nasdaq Composite index rose 0.83%.

Expectations for an end to the U.S. fiscal deadlock grew after Republicans on Thursday offered to extend the government’s borrowing authority for several weeks, temporarily staving off a default, which sent stocks rising in a relief rally.

The White House has yet to agree on the offer, though talks between President Barack Obama and congressional Republicans continued Friday, which boosted spirits despite a disappointing consumer sentiment report.

U.S. Treasury Secretary Jack Lew reiterated Thursday that the U.S. will reach its debt ceiling on Oct. 17 and warned that the political crisis is starting to hurt the economy. Lew was making his comments during testimony before the Senate finance committee.

The Thomson Reuters/University of Michigan’s preliminary consumer sentiment index for October fell to 75.2 from 77.5 in September.

Analysts were expecting a downtick to 76.0.

The study also found that inflation expectations for this month declined to 2.9%, from 3.3% in September.

Solid quarterly earnings reports from JPMorgan Chase and Wells Fargo boosted stock prices as well.

Leading Dow Jones Industrial Average performers included Johnson & Johnson, up 1.91%, Visa, up 1.59%, and Goldman Sachs, up 1.23%.

The Dow Jones Industrial Average’s worst performers included DuPont, down 0.62%, Boeing, down 0.57%, and Merck, down 0.40%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.10%, France’s CAC 40 rose 0.04%, while Germany’s DAX 30 rose 0.45%. Meanwhile, in the U.K. the FTSE 100 finished up 0.88%.

Forex

The dollar held steady against most major currencies on Friday after U.S. policymakers grew closer agreeing on a plan to end a fiscal impasse that closed the U.S. government on Oct. 1 and threatened to throw the country into default.

In U.S. trading on Friday, EUR/USD was up 0.23% at 1.3551.

Expectations for an end to the U.S. fiscal deadlock grew after Republicans on Thursday offered to extend the government’s borrowing authority for several weeks, temporarily staving off a default and bolstering demand for the greenback.

The White House has yet to agree on the offer, which capped the dollar’s gains, though talks between President Barack Obama and congressional Republicans continued Friday, which supported the greenback against the single currency somewhat.

Earlier Friday, Japan Minister of Economy Akira Amari urged U.S. politicians to show some responsibility, stressing that if the current shutdown was allowed to continue, the U.S. could default on its debt.

U.S. Treasury Secretary Jack Lew reiterated Thursday that the U.S. will reach its debt ceiling on Oct. 17 and warned that the political crisis is starting to hurt the economy. Lew was making his comments during testimony before the Senate finance committee.

The greenback was up against the pound, with GBP/USD down 0.07% at 1.5956.

The dollar was up against the yen, with USD/JPY up 0.35% at 98.50, and down against the Swiss franc, with USD/CHF down 0.04% at 0.9114.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.41% at 1.0355, AUD/USD up 0.16% at 0.9468 and NZD/USD trading up 0.51% at 0.8325.

In Canada earlier, official data revealed that the number of employed individuals rose by 11,900 in September, above expectations for a 10,000 increase, after 59,200 rise the previous month.

The report also showed that Canada’s unemployment rate ticked down to 6.9% last month, from 7.1% in August. Analysts were expecting the unemployment rate to slip to 7.0% in September.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.13% at 80.47.

Gold

Gold prices fell on Friday, particularly sharp due to one large trade, on sentiments that a spending impasse in the U.S. Congress that closed the government on Oct. 1 will end soon, which bolstered demand for the dollar.

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

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,267.00 during U.S. afternoon hours, down 2.31%.

Gold prices hit a session low of USD1,262.60 a troy ounce and high of USD1,294.50 a troy ounce.

Gold futures were likely to find support at USD1,262.60 a troy ounce, the earlier low, and resistance at USD1,330.10, Tuesday’s high.

The December contract settled down 0.79% at USD1,296.90 a troy ounce on Thursday.

Elsewhere on the Comex, silver for December delivery was down 2.96% at USD21.248 a troy ounce, while copper for December delivery was up 0.70% and trading at USD3.271 a pound.

Oil

Profit taking sent crude prices falling on Friday despite hopes that U.S. policymakers will find their way out of a government shutdown, as fears persisted the fiscal impasse may weigh on growth and crimp demand for fuel and energy.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD101.59 a barrel during U.S. trading, down 1.38%.

The commodity hit a session low of USD100.63 and a high of USD102.97. The November contract settled up 1.38% at USD103.01 a barrel on Thursday.

Oil futures were likely to find support at USD100.63 a barrel, the earlier low, and resistance at USD104.06 a barrel, Tuesday’s high.

Elsewhere, the International Energy Agency reported earlier that non-OPEC supply would rise by an average of 1.7 million barrels per day in 2014, the highest annual growth since the 1970s, which pressured prices lower as did concerns the country is awash in oil.

The U.S. Energy Information Administration said in its weekly report on Thursday that U.S. crude oil inventories rose by 6.8 million barrels in the week ended Oct. 4, well above expectations for an increase of 1.5 million barrels.

Total U.S. crude oil inventories stood at 370.5 million barrels as of last week.

The report also showed that total motor gasoline inventories increased by 149,000 barrels, below expectations for a gain of 1.3 million barrels.

Meanwhile on the ICE Futures Exchange, Brent oil futures for November delivery were down 0.68% at USD111.04 a barrel, up USD9.45 from its U.S. counterpart.

Natural Gas

Natural gas prices extended Thursday’s gains into Friday as markets applauded official data revealing that supplies rose less than expected last week.

Elsewhere, forecasts for cold weather arriving in late October supported prices as well.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.773 per million British thermal units during U.S. trading, up 1.33%.

The commodity hit a session low of USD3.727 and a high of USD3.784.

The November contract settled up 1.20% at USD3.723 per million British thermal units on Thursday.

Futures were likely to find support at USD3.482 per million British thermal units, the low from Oct. 4 and resistance at USD3.809, the high from Sept. 19.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Oct. 4 rose by 90 billion cubic feet, below market expectations for an increase of 94 billion cubic feet.

Inventories increased by 73 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 84 billion cubic feet.

Total U.S. natural gas storage stood at 3.577 trillion cubic feet as of last week. Stocks were 138 billion cubic feet less than last year at this time and 55 billion cubic feet above the five-year average of 3.522 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 101 billion cubic feet below the five-year average, following net injections of 51 billion cubic feet.

Stocks in the Producing Region were 102 billion cubic feet above the five-year average of 1.086 billion cubic feet after a net injection of 30 billion cubic feet.

Meanwhile, market participants continued to focus on weather forecasts to gauge the strength of demand for the fuel.

While weather forecasting models continued to point to above-average temperatures in the central and eastern U.S. through Oct. 21, below-normal temperatures will settle in afterwards, boosting near-term demand expectations for the fuel.

Demand for natural gas tends to rise at the country’s thermal power plants as temperatures fall, as homes and businesses throttle up on their heaters.

Hot or cold temperatures tend to boost demand for the commodity.

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