Investing.com Weekly Wrap-Up 27 December 2013

by Investing.com Staff, Investing.com

U.S. stocks end flat as Fed rally cools; Dow slips 0.01%

Stock prices finished Friday flat as investors took profits after spending the past several sessions applauding positive indicators and a Federal Reserve decision to shave USD10 billion off its monthly USD85 billion in monthly bond purchases, a sign the economy is improving and in less need of monetary support.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.01%, the S&P 500 index fell 0.03%, while the Nasdaq Composite index fell 0.25%.

Stocks repeatedly hit record highs after the Federal Reserve last week announced plans to begin scaling down its monthly bond-buying program.

Profit-taking sent prices edging lower on Friday, especially amid concerns that a gradual tapering of Federal Reserve stimulus programs will result in borrowing costs inching up down the road.

Still, expectations for a more robust economy in 2014 sent prices rising in recent days before hitting levels ripe for profit taking on Friday.

On Thursday, the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits declined by 42,000 to a seasonally adjusted 338,000 last week.

Analysts were expecting U.S. jobless claims to fall by 35,000 to 345,000 from the previous week’s revised total of 380,000, which was the highest since March.

Leading Dow Jones Industrial Average performers included Cisco, up 1.03%, 3M, up 0.76%, and Exxon Mobil, up 0.58%.

The Dow Jones Industrial Average’s worst performers included Boeing, down 0.99%, Microsoft, down 0.41%, and Intel, down 0.37%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 1.16%, France’s CAC 40 rose 1.40%, while Germany’s DAX 30 rose 1.06%. Meanwhile, in the U.K. the FTSE 100 finished up 0.85%.

Forex

The dollar traded mixed to lower against most major currencies on Friday after a key European Central Bank official warned against keeping interest rates low, which sparked demand for the euro.

In U.S. trading on Friday,EUR/USD was up 0.45% at 1.3753.

European Central Bank Governing Council member Jens Weidmann said earlier that keeping interest rates low may endanger political reforms.

According to Germany’s Bild newspaper, Weidmann said low inflation shouldn’t be used to justify loose monetary policy.

“We must take care to raise interest rates again in a timely manner should inflation pressures build,” he reportedly said, and his comments sent the euro firming against the dollar.

The euro shot up by more than 1% earlier though it trimmed gains shortly afterwards.

The dollar, meanwhile, saw some support from U.S. Department of Labor Thursday data showing the number of individuals filing for initial jobless benefits was lower than expected.

The upbeat employment data supported views that the U.S. economy will be strong enough to allow the Federal Reserve to continue scaling down stimulus through 2014, which cushioned the dollar somewhat.

The greenback was down against the pound, with GBP/USD up 0.37% at 1.6471.

The dollar was up against the yen, with USD/JPY up 0.31% at 105.13, and down against the Swiss franc, with USD/CHF down 0.54% at 0.8918.

In Japan, hit-or-miss data weakened the yen against the single currency.

Official data earlier showed that household spending in Japan fell 0.2% in November compared to a year earlier and after a 0.9% rise in October. Analysts had expected household spending to increase by 1.7% last month.

A separate report showed that Tokyo’s core consumer price inflation, which excludes fresh food, rose at an annualized rate of 0.7% in December, in line with expectations, after a 0.6% rise the previous month.

Preliminary government data also showed that industrial production in Japan ticked up 0.1% last month, confounding expectations for a 0.4% increase after rising 1% in October.

In addition, data showed that Japan’s retail sales rose 4% in November on year, above expectations for a 2.9% gain. October’s retail sales rose 2.3%.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.59% at 1.0711, AUD/USD down 0.34% at 0.8866 and NZD/USD trading down 0.13% at 0.8155.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.22% at 80.49.

GOLD

Gold prices rose on Friday on the back of increased physical demand though gains were limited on fears 2013 may see the yellow metal’s worse losses in decades.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,215.10 during U.S. afternoon hours, up 0.23%.

Gold prices hit a session low of USD1,208.60 a troy ounce and high of USD1,218.30 a troy ounce.

Gold futures were likely to find support at USD1,192.20 a troy ounce, Monday’s low, and resistance at USD1,251.40, the high from Dec. 16.

The February contract settled up 0.75% at USD1,212.30 a troy ounce on Thursday.

Talk of heightened physical demand in China sent gold prices rising earlier though gains were muted on sentiments that the Federal Reserve’s plans to trim USD10 billion from its USD85 billion in monthly bond purchases in January will lead to further cuts to the stimulus program.

Fed bond purchases have elevated gold prices for over a year by suppressing long-term interest rates, weakening the dollar in the process.

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

Gold prices have already contracted by more than 27% this year on sentiments that the days of ultra-loose monetary policies that have supported the precious metal since 2008 will are slowly coming to an end.

Elsewhere on the Comex, silver for March delivery was up 0.64% at USD20.043 a troy ounce, while copper for March delivery was down 0.23% and trading at USD3.391 a pound.

Oil

Oil prices jumped up on Friday after official data revealed U.S. stockpiles fell more than expected last week, a sign the U.S. economy is gaining steam and will demand more fuel and energy going forward.

On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD100.27 a barrel during U.S. trading, up 0.72%.

The commodity hit a session low of USD99.37 and a high of USD100.67. The February contract settled up 0.33% at USD99.55 a barrel on Thursday.

Oil futures were likely to find support at USD98.53 a barrel, Monday’s low, and resistance at USD101.22 a barrel, the high from Oct. 21.

The U.S. Energy Information Administration reported in its weekly report earlier that U.S. crude oil inventories fell by 4.73 million barrels in the week ended Dec. 20, far surpassing market expectations for a decline of 2.32 million barrels, a sign demand is on the rise.

The report also showed that total motor gasoline inventories fell by 616,000 barrels compared to expectations for a gain of 1.26 million barrels.

Solid data out of the U.S. labor market boosted oil prices as well.

Meanwhile on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.06% at USD111.92 a barrel, up USD11.65 from its U.S. counterpart.

Natural Gas

Natural gas prices fell on Friday after data revealed U.S. inventory levels fell in line with lackluster market expectations, while long-range weather forecasts calling for above-normal temperatures in January pushed down prices as well.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.405 per million British thermal units during U.S. trading, down 1.60%.

The commodity hit a session low of USD4.373 and a high of USD4.487.

The February contract settled up 0.16% at USD4.476 per million British thermal units on Thursday.

Futures were likely to find support at USD4.196 per million British thermal units, the low from Dec. 17, and resistance at USD4.577, Monday’s high.

The U.S. Energy Information Administration reported earlier that natural gas stockpiles fell 177 billion cubic feet to 3.071 trillion in the week ended Dec. 20, in line with expectations though some investors were hoping for a more upbeat report just before its release, which sparked a selloff.

Updated weather forecast pressured prices lower as well.

Natgasweather.com reported earlier that a strong cold front will sweep through the northern Plains Saturday and into the eastern U.S. on Sunday and Monday, though mid January could usher in above-normal temperatures, which sent prices dipping.

Uncertainty due to the long-range nature of the forecasts cushioned losses.