Investing.com Weekly Wrap-Up 06 December 2013

by Investing.com Staff, Investing.com

U.S. stocks gain on solid jobs, sentiment data; Dow rises 1.26%

U.S. stocks shot up on Friday after the November jobs report and a widely watched gauge of consumer sentiment beat expectations and fueled hopes for a more robust economic recovery around the corner.

At the close of U.S. trading, the Dow Jones Industrial Average rose 1.26%, the S&P 500 index rose 1.12%, while the Nasdaq Composite index rose 0.73%. U.S. stocks were mixed after the closing bell on Friday.

The Department of Labor reported earlier that the U.S. economy added 203,000 jobs in November, beating expectations for a 180,000 increase and up from a downwardly revised 200,000 rise the previous month.

In the private sector, 196,000 jobs were added last month compared to expectations for a 180,000 rise, after an increase of 214,000 in October.

The report also said the U.S. unemployment rate fell to 7.0% in November, from 7.3% in October, beating expectations for a downtick to 7.2%.

Also on Friday, the preliminary Thomson Reuters/University of Michigan consumer sentiment index increased to 82.5 in December from 75.1 the previous month, far surpassing expectations for a 76.0 reading.

Stocks also rose on sentiment that despite the improving data, the Federal Reserve won’t begin to taper stimulus tools such as monthly bond purchases in December but will likely wait until early 2014.

Stimulus tools such as the Fed’s USD85 billion in monthly bond purchases drive down interest rates to spur recovery, boosting stock prices in the process, though talk of their dismantling can dampen stock prices by fanning uncertainty as to how equities will perform without a monetary crutch.

Leading Dow Jones Industrial Average performers included Intel, up 2.25%, Procter & Gamble, up 2.22%, and DuPont, up 2.04%.

The Dow Jones Industrial Average’s worst performers included Visa, which was up 0.04%, JPMorgan Chase, up 0.41%, and Wal-Mart Stores, up 0.64%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.97%, France’s CAC 40 rose 0.72%, while Germany’s DAX 30 rose 0.96%. Meanwhile, in the U.K. the FTSE 100 finished up 0.83%.

Forex

The dollar rose against the yen after markets applauded a better-than-expected U.S. November jobs report, though profit taking wiped out gains against the euro and other currencies on Friday.

In U.S. trading on Friday, EUR/USD was up 0.19% at 1.3692.

The U.S. economic data kept expectations firmly in place that the Federal Reserve will begin scaling back its USD85 billion in monthly bond purchases, which weaken the dollar to spur recovery, however. profit taking sent the greenback falling, as a strong jobs report was already priced into trading prior to Friday.

The euro and other higher-yielding currencies continued to see support on the European Central Bank’s decision this week to forgo implementing negative interest rates, which many investors were expecting.

The pound firmed against the dollar on Friday after data revealed U.K. housing prices rose more than expected in November, while profit takers sold the dollar after locking in gains from a better-than-expected jobs report.

In U.S. trading on Friday, GBP/USD was trading at 1.6340, up 0.02%, up from a session low of 1.6294 and off from a high of 1.6393.

Cable was likely to find support at 1.6134, the low from Nov. 25, and resistance at 1.6404, Thursday’s high.

Industry data showed that house price inflation in the U.K. rose 1.1% in November from October, beating expectations for a 0.6% increase, after an upwardly revised 1.3% rise the previous month.

On year, house price inflation rose 7.7% in November, beating market calls for a 7.2% reading.

The data helped edged the pound above the dollar in choppy trading as investors digested better-than-expected U.S. data.

Industry data showed that house price inflation in the U.K. rose 1.1% in November from October, beating expectations for a 0.6% increase, after an upwardly revised 1.3% rise the previous month.

On year, house price inflation rose 7.7% in November, beating market calls for a 7.2% reading.

The dollar was up against the yen, with USD/JPY up 1.14% at 102.96, and down against the Swiss franc, with USD/CHF down 0.42% at 0.8929.
In Canada, official data showed that the economy added 21,600 jobs last month, blowing past expectations for a 12,000 rise, after an increase of 13,200 in October.

Canada’s unemployment rate remained unchanged at 6.9% in November, compared to expectations for a rise to 7.0%.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.05% at 1.0660, AUD/USD up 0.40% at 0.9098 and NZD/USD trading up 0.80% at 0.8286.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% at 80.34.

GOLD

Gold prices fell on Friday after better-than-expected U.S. employment and consumer sentiment reports hit the wire and fanned widespread expectations for the Federal Reserve to begin paring back stimulus programs in early 2014.

Stimulus tools such as the Fed’s USD85 billion in monthly bond purchases aim to drive recovery by pushing down long-term interest rates, weakening the dollar in the process, and talk of their dismantling often strengthens the greenback.

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

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,230.30 during U.S. afternoon hours, down 0.13%.

Gold prices hit a session low of USD1,211.20 a troy ounce and high of USD1,243.30 a troy ounce.

Gold futures were likely to find support at USD1,211.10 a troy ounce, Wednesday’s low, and resistance at USD1,250.80, Wednesday’s high.

The February contract settled down 1.23% at USD1,231.90 a troy ounce on Thursday.

Elsewhere on the Comex, silver for March delivery was down 0.24% at USD19.523 a troy ounce, while copper for March delivery was up 0.46% and trading at USD3.244 a pound.

Oil

Oil prices rose on Friday after data revealed the U.S. economy picked up more jobs than expected in November, though the monetary implications of such improving data capped the commodity’s gains.

On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD97.66 a barrel during U.S. trading, up 0.29%.

The commodity hit a session low of USD97.08 and a high of USD98.05. The January contract settled up 0.19% at USD97.38 a barrel on Thursday.

Oil futures were likely to find support at USD92.57 a barrel, Monday’s low, and resistance at USD98.80 a barrel, the high from Oct. 28.

U.S. data sent oil rising on sentiments that the U.S. economy is gaining steam and will demand more fuel and energy going forward.

Monetary implications of a more robust U.S. economy capped oil’s gains, however.

The jobs report kept expectations firmly in place that the Federal Reserve will begin scaling back its USD85 billion in monthly bond purchases in 2014.

Fed bond purchases aim to drive recovery by driving down interest rates, weakening the dollar while they remain in place, though talk of their dismantling strengthens the greenback.

A stronger greenback makes oil a less attractive commodity on dollar-denominated exchanges.

Meanwhile on the ICE Futures Exchange, Brent oil futures for January delivery were up 0.42% at USD111.45 a barrel, up USD13.79 from its U.S. counterpart.

Natural Gas

Natural gas prices rose on Friday as investors applauded bullish supply data released on Thursday as well as chilly forecasts.

On the New York Mercantile Exchange, natural gas futures for delivery in January traded at USD4.169 per million British thermal units during U.S. trading, up 0.88%.

The commodity hit a session low of USD4.123 and a high of USD4.200.

The January contract settled up 4.43% at USD4.132 per million British thermal units on Thursday.

Futures were likely to find support at USD3.951 per million British thermal units, Thursday’s low, and resistance at USD4.229, the high from May 29.

Cold weather gripping much of the nation will encompass more of the heavily populated eastern U.S. in the coming days, according to updated weather forecasting models, which boosted natural gas futures.

Colder temperatures hike the need for heating this time of year, thus increasing demand for natural gas at the nation’s thermal power generators.

A fresh blast of arctic air will come sweeping down afterwards and make any warming trends short lived.

Natgasweather.com reported in its 8-14 day outlook that colder air will stay in place through Dec. 16, but a return to normal temperatures could take place around Dec. 20.
Bullish supply data released Thursday supported prices as well.

The U.S. Energy Information Administration reported that total U.S. gas inventories fell last week by 162 billion cubic feet to 3.614 trillion cubic feet, well above consensus forecasts for a drop of 138 billion cubic feet.

In the week before last, natural gas in storage fell by 13 billion cubic feet compared to expectations for a withdrawal of 10 billion cubic feet.

Stocks fell 62 billion cubic feet during the same week a year earlier.