Investing.com Weekly Wrap-Up 31 January 2014

by Investing.com Staff, Investing.com

U.S. stocks fall on disappointing earnings; Dow dips 0.94%

Weak fourth-quarter earnings sent U.S. stock prices falling on Friday, though solid consumer sentiment data cushioned losses.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.94%, the S&P 500 index fell 0.65%, while the Nasdaq Composite index fell 0.47%.

Disappointing earnings from retailer Amazon and toymaker Mattel sent stock prices falling on Friday, as did a profit forecast from Wal-Mart.

Ongoing concerns that emerging markets may be cooling also pushed prices lower, though U.S. data curbed losses somewhat.

The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment came in at 81.2 in January, beating expectations for a 81.0 reading.

Also in the U.S. official data revealed consumer spending rose 0.4% in December, beating expectations for a 0.2% reading though personal income came in unchanged, missing expectations for a 0.0% gain.

The data boosted spirits somewhat by painting a picture of a U.S. economy moving along on its road to recovery at a time when monetary policy still remains loose.

Leading Dow Jones Industrial Average performers included Microsoft, up 2.43%, Caterpillar, up 0.74%, and Verizon, up 0.64%.

The Dow Jones Industrial Average’s worst performers included Chevron, down 4.35%, Visa, down 2.54%, and Exxon Mobil, down 2.13.%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.31%, France’s CAC 40 fell 0.34%, while Germany’s DAX 30 fell 0.71%. Meanwhile, in the U.K. the FTSE 100 finished down 0.43%.

Forex

The greenback firmed against most major currencies on Friday after investors applauded a widely-watched gauge of consumer sentiment.

In U.S. trading on Friday, EUR/USD was down 0.41% at 1.3449.

U.S. data kept expectations firm that the Federal Reserve will continue tapering its monthly bond-buying program as the year progresses.

Currently, the Fed is buying USD65 billion in Treasury and mortgage debt a month from banks, which weakens the dollar to spur recovery.

The program began in 2012, starting out at USD85 billion in Fed asset purchases a month.

The dollar was down against the yen, with USD/JPY down 0.36% at 102.35, and up against the Swiss franc, with USD/CHF up 0.33% at 0.9058.

Concerns the emerging markets may be cooling, as evidenced by soft Chinese manufacturing data, have weakened emerging-market currencies and roiled stock markets worldwide, though the yen has served as the safe-haven currency of choice during the turbulence.

Japanese data also supported the yen on Friday.

According to figures released by Ministry of Economy, Trade and Industry, Japan’s industrial production in December rose by 1.1% against the expected rise of 1.2% but up from a previous fall of 0.1%.

Also in Japan, the Statistics Bureau reported that country’s headline and core consumer price indices both remained unchanged at 0.7%, in line with expectations.

The greenback was up against the pound, with GBP/USD down 0.31% at 1.6434.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.30% at 1.1124, AUD/USD down 0.55% at 0.8748 and NZD/USD down 1.00% at 0.8085.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.23% at 81.36.

GOLD

Gold prices edged lower on Friday after the upbeat report on U.S. consumer sentiment sparked demand for the dollar, though bottom fishers snapped up nicely priced position in the yellow metal and cushioned losses.

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

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,242.00 a troy ounce during U.S. trading, down 0.04%, up from a session low of USD1,238.40 and off a high of 1,254.70.

The April contract settled down 1.56% at USD1,242.50 on Thursday.

Futures were likely to find support at USD1,237.90 a troy ounce, Thursday’s low, and resistance at USD1,270.10, Wednesday’s high.

Solid U.S. data in recent weeks have pushed gold prices lower, though bottom fishers viewed the commodity as an attractive buy on Friday

Meanwhile, silver for March delivery was up 0.12% and trading at USD19.148 a troy ounce, while copper futures for March delivery were down 0.66% and trading at USD3.205 a pound.

Oil

Crude prices fell in U.S. trading on Friday after investors locked in gains from Thursday’s solid U.S. economic growth report and sold the commodity for profits.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in March traded at USD98.06 a barrel during U.S. trading, down 0.17%. New York-traded oil futures hit a session low of USD97.12 a barrel and a high of USD98.22 a barrel.

The March contract settled up 0.89% at USD98.23 a barrel on Thursday.

Nymex oil futures were likely to find support at USD95.22 a barrel, Monday’s low, and resistance at USD98.58 a barrel, Thursday’s high.

Oil prices gained after the Commerce Department reported on Thursday that U.S. gross domestic product expanded 3.2% in the three months to December, in line with most forecasts, even outpacing some, following a 4.1% rise in the third quarter.

Exports grew by 11.4%, while federal consumption decreased, which drew particular applause by fanning hopes the private sector will fuel more growth going forward.

The data showed personal consumption grew 3.3% in the three months ended Dec. 31, the biggest increase in three years.

On Friday, investors sold the commodity for profits, particularly on the monetary implications of improving U.S. growth.

The Federal Reserve is likely to continue winding down its monthly bond-buying program, which weakens the dollar to spur recovery.

A stronger greenback often makes commodities like oil less attractive on dollar-denominated exchanges.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for March delivery were down 0.93% and trading at 106.95 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD8.89 a barrel.

Natural Gas

Natural gas futures fell on Friday after updated weather-forecasting models called for milder temperatures to return to the U.S. in February and curb demand for heating in the country’s homes and businesses.

On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD4.827 per million British thermal units during U.S. trading, down 3.68%. The commodity hit session high of USD5.723 and a low of USD4.994.

The March contract settled down 8.31% on Thursday to end at USD5.011 per million British thermal units.

Natural gas futures were likely to find support at USD4.652 per million British thermal units, Monday’s low, and resistance at USD5.481, Wednesday’s high.

Recent blasts of frigid air sweeping across the U.S. will give way to milder temperatures in February and prompt homes and businesses to scale back on their heating.

Updated weather-forecasting models called for below-normal temperatures in pockets of the northern U.S. in early February, though the rest of the country could see milder temperatures, which should prompt thermal power producers to cut back on their demand for natural gas.

Thursday’s supply data also pressured prices down.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Jam. 24 fell by 230 billion cubic feet, missing expectations for a decline of 236 billion cubic feet.

Gas supplies fell by 191 billion cubic feet during the same week a year earlier, while the five-year average change for the week is a decline of 162 billion cubic feet.

Total U.S. natural gas storage stood at 2.193 trillion cubic feet. Stocks were 637 billion cubic feet less than last year at this time and 437 billion cubic feet below the five-year average of 2.630 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 269 billion cubic feet below the five-year average, following net withdrawals of 124 billion cubic feet.

Stocks in the Producing Region were 121 billion cubic feet below the five-year average of 924 billion cubic feet after a net withdrawal of 84 billion cubic feet.