by Investing.com Staff, Investing.com
U.S. stocks dropped on Friday amid a multi-session sell-off in the technology and biotechnology sectors, as investors felt valuations have grown too lofty, while disappointing earnings from JPMorgan Chase dampened spirits as well.
Biotech, Internet and other tech companies fell on Friday amid growing concerns that valuations have grown too frothy after a five-year bull market fueled in part by loose monetary policies.
Elsewhere, U.S. financial giant J P Morgan Chase & Co (NYSE:JPM) announced a 19% drop in first-quarter earnings, which added to the selloff.
Solid U.S. data did little to boost spirits on Wall Street.
The preliminary Thomson Reuters/University of Michigan consumer sentiment index for April came to 82.6, beating expectations for a 81.0 reading.
Separately, official data showed that the U.S. producer price index rose 0.5% in March, exceeding expectations for a 0.1% gain, after a 0.1% fall the previous month.
Core producer price inflation, which is stripped of volatile food, energy and trade items, rose 0.6% in March, beating expectations for a 0.2% rise after a 0.2% decline in February.
European indices, meanwhile, finished lower.
The dollar traded mixed to higher against most major currencies on Friday after U.S. consumer sentiment and wholesale pricing reports beat expectations.
In U.S. trading on Friday, EUR/USD was down 0.03% at 1.3883.
Upbeat U.S. indicators supported the greenback on Friday.
The higher than expected inflation numbers did not change the growing market consensus that the Federal Reserve is nowhere close to tightening policy watered down the greenback’s gains.
Meanwhile across the Atlantic, the euro saw some support after Greece made a successful return to the financial markets on Thursday, raising €3 billion in its first bond auction since 2010, when Athens sought its first bailout.
The greenback was up against the pound, with GBP/USD down 0.28% at 1.6737.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 79.55.
Gold futures were trading near three-week highs on Friday, as the minutes of the Federal Reserve’s most recent policy meeting continued to support the precious metal, while markets awaited the release of U.S. data later in the day.
On the Comex division of the New York Mercantile Exchange,gold futures for June delivery traded at $1,322.10 a troy ounce during European afternoon trade, up 0.12%.
The June contract settled 1.12% higher on Thursday to end at $1,320.5 a troy ounce.
Gold futures were likely to find support at $1,301.20 a troy ounce, the low from April 9 and resistance at $1,334.90, the high from March 24.
Gold prices strengthened after the Fed’s March meeting minutes released on Wednesday showed that policymakers discussed whether to keep interest rates at record lows until inflation moves higher, and did not elaborate on a possible timeframe for when rates could start to rise.
The minutes also indicated growing concerns among officials over persistently low inflation.
Last month the U.S. central bank reduced the monthly pace of purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.”
“Members agreed that there was sufficient underlying strength in the broader economy to support ongoing improvement in labor-market conditions,” the minutes said.
Gold prices had tumbled from a six-month high in mid-March, after Fed Chair Janet Yellen said that interest rates could start to rise around six months after the end of the Fed’s bond purchasing program, suggesting a rate hike could occur in the early part of 2015.
Oil prices rose on Friday after U.S. consumer sentiment and wholesale pricing data beat expectations and fueled expectations for a more robust U.S. recovery down the road.
On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in May traded at $104.10 a barrel during U.S. trading, up 0.68%. New York-traded oil futures hit a session low of $103.02 a barrel and a high of $104.42 a barrel.
The May contract settled down 0.19% at $103.40 a barrel on Thursday.
Nymex oil futures were likely to find support at $99.95 a barrel, Monday’s low, and resistance at $105.22 a barrel, the high from March 3.
Stronger U.S. indicator numbers drew applause in energy markets, reminding investors that the U.S. economy continues to improve and will likely demand more fuel and energy going forward and offset cooling emerging markets.
Crude oil prices took a hit on Thursday after official data showed that China’s crude oil imports fell to a five-month low in March, dropping to 5.55 million barrels a day, while oil-product imports fell to 540,000 barrels a day.
China’s overall exports unexpectedly fell for the second month in March, while imports dropped sharply, adding to concerns over a slowdown in the world’s second-largest oil consumer.
This week’s supply report also bolstered prices.
In the U.S., the Energy Information Administration said in its weekly report on Wednesday that crude oil inventories rose by 4.03 million barrels in the week ended April 4, surpassing expectations for a build of 1.3 million barrels.
Total U.S. crude oil inventories stood at 384.1 million barrels as of last week.
The report came one day after the American Petroleum Institute said U.S. oil inventories rose by 7.1 million barrels last week, well above expectations for an increase of 2.5 million barrels.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for May delivery were up 0.27%, trading at US$107.76 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$3.66 a barrel.
Natural gas futures edged lower in Friday trading after updated weather-forecasting models called for mild temperatures to hover over much of the country in the coming week.
On the New York Mercantile Exchange, natural gas futures for delivery in May traded at $4.639 per million British thermal units during U.S. trading, down 0.34%. The commodity hit session high of $4.673 and a low of $4.608.
The May contract settled up 1.50% on Thursday to end at $4.655 per million British thermal units.
Natural gas futures were likely to find support at $4.222 per million British thermal units, the low from April 2, and resistance at $4.702, Thursday’s high.
While a weak cool front pushes through the northern U.S., most of country will see mild temperatures that should cut into the need for heating, though cooler temperatures could return later next week for parts of the central and eastern U.S., Natgasweather.com reported, which cushioned losses.
Profit taking also sent prices edging lower, as investors locked in gains from Thursday’s rather bullish supply report and sold the commodity for profits.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended April 4 rose by 4 billion cubic feet after a drop of 74 billion cubic feet in the previous week.
Analysts had expected a build of 13 billion cubic feet, and the lower-than-expected figure sparked a rally.
Total U.S. natural gas storage stood at 826 billion cubic feet, the lowest for this time of year since 2003.
Severely cold weather over this past winter saw natural gas stockpiles fall to 11-year lows, sparking concerns that producers may not be able to refill inventories before the next heating season. Producers typically replenish inventories between April and October, when demand is lower.
The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
Spring and fall see the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.