Investing.com Weekly Wrap-Up 09 May 2014

U.S. stocks gain on tech rebound; Dow rises 0.20%, hits new record

by Investing.com Staff, Investing.com

U.S. stocks rose on Friday as bottom fishers snapped up nicely priced technology shares and looked past escalating tensions in Ukraine, sending the Dow Jones Industrial Average to an all-time high.

At the close of U.S. trading, the Dow 30 rose 0.20% to close at a record-high 16,583.34, the S&P 500 index rose 0.15%, while the NASDAQ Compositeindex rose 0.50%.

Technology and biotech shares have taken a beating in recent sessions, as investors have viewed the sector as too frothy, the beneficiaries of ultra-loose monetary policies and Federal Reserve stimulus programs that are tapering now and due to wrap up likely sometime this year.

By Friday, investors felt such momentum shares had fallen too far and jumped in from the sidelines to snap up attractive buys.

Elsewhere, investors looked past escalating tensions in Ukraine.

Pro-Russia separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule and said they plan to go ahead on Sunday with a vote that some fear could lead to a civil war.

European Commission President Jose Manuel Barroso said earlier that the European Union was still struggling to agree on what approach to take on the crisis and added the event was the biggest threat to European security since the fall of the Berlin Wall.

Still, U.S. stocks rose on sentiments that the U.S. economy continues to recover and will bolster corporate fundamentals along the way, with consumer discretionary and healthcare companies leading the way.

Leading Dow Jones Industrial Average performers included McDonald’s Corporation (NYSE:MCD), up 0.97%, Home Depot Inc (NYSE:HD), up 0.88%, and Merck & Company Inc (NYSE:MRK), up 0.68%.

The Dow Jones Industrial Average’s worst performers included J P Morgan Chase & Co (NYSE:JPM), down 0.63%, Dupont Fabros Technology Inc (NYSE:DFT), down 0.46%, and Pfizer Inc (NYSE:PFE), down 0.46%.

European indices, meanwhile, finished lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.62%, France’s CAC 40 fell 0.66%, while Germany’s AMUNDI Short DAX 30 (XETRA:C2D) fell 0.27%. Meanwhile, in the U.K. the FTSE 100 fell 0.36%.

Forex

In U.S. trading on Friday, EUR/USD was down 0.66% at 1.3748.

The European Central Bank this week left interest rates unchanged at 0.25%, though the euro dropped after ECB President Mario Draghi said the bank’s governing council would be comfortable acting at its next meeting after the bank publishes fresh inflation and growth forecasts.

Draghi attributed weak inflation rates to food and energy prices, but added that the strong euro and weak domestic demand are also pushing down inflation.

He reiterated that the ECB does not have a target for the euro exchange rate but stressed that the bank would closely monitor exchange-rate developments.

Market talk that fresh easing measures or rate cuts softened the euro, which boosted the dollar’s safe-haven appeal.

The ECB will meet on June 5 to discuss monetary policy.

Elsewhere on Friday, official data revealed that Germany’s trade surplus narrowed to €14.8 billion in March from €15.8 billion in February, whose figure was revised from a previously estimated surplus of €15.7 billion. Analysts had expected the trade surplus to widen to €16.6 billion in March.

The turmoil in Ukraine also contributed to pressure on the euro.

The dollar was up against the yen, with USD/JPY up 0.12% at 101.78 and up against the Swiss franc, with USD/CHF up 0.79% at 0.8872.

The greenback was up against the pound, with GBP/USD down 0.54% at 1.6841.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.64% at 1.0900, AUD/USD down 0.20% at 0.9355 and NZD/USD down 0.36% at 0.8614.

Gold

Gold prices edged up in U.S. trading on Friday as Ukraine inched closer to civil war, which bolstered the yellow metal’s safe-haven appeal.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at 1,287.80 a troy ounce during U.S. trading, up 0.01%, up from a session low of $1,285.60 and off a high of $1,294.50.

The June contract settled down 0.09% at $1,287.70 on Thursday.

Futures were likely to find support at $1,285.60 a troy ounce, the earlier low, and resistance at $1,314.70, Wednesday’s high.

Events in Ukraine spooked investors and boosted demand for gold.

Elsewhere, investors continued to track European monetary policy.

The European Central Bank this week left interest rates unchanged at 0.25%, though the euro dropped after ECB President Mario Draghi said the bank’s governing council is comfortable with acting at its next meeting after the bank publishes fresh inflation and growth forecasts.

Draghi attributed weak inflation rates to food and energy prices, but added that the strong euro and weak domestic demand are also pushing down inflation.

He reiterated that the ECB does not have a target for the euro exchange rate but stressed that the bank would closely monitor exchange-rate developments.

Market talk that fresh easing measures or rate cuts softened the euro and boosted the dollar, which capped gold’s gains because the precious metal tends to trade inversely with the greenback.

The bank will meet on June 5 to discuss monetary policy.

Meanwhile, silver for July delivery was down 0.14% at $19.112 a troy ounce, while copper futures for July delivery were up 0.76% at $3.086 a pound.

Oil

Crude futures edged lower on Friday as investors sold the commodity for profits after locking in gains on Ukraine tensions and jumped to the sidelines to await fresh news to steer prices higher or lower.

On the New York Mercantile Exchange, West Texas Intermediate crude Oil for delivery in June traded at $99.90 a barrel during U.S. trading, down 0.36%. New York-traded oil futures hit a session low of $99.87 a barrel and a high of $101.15 a barrel.

The June contract settled down 0.51% at $100.26 a barrel on Thursday.

Nymex oil futures were likely to find support at $98.75 a barrel, the low from May 1, and resistance at $101.15 a barrel, the session high.

Concerns that Ukraine is descending into civil war have pushed up oil prices in recent sessions, as fears persist the conflict could disrupt shipments from Russia, the world’s second-largest exporter after Saudi Arabia.

In spite of the geopolitical uncertainty oil prices fell after investors sold for profits and jumped to the sidelines to await fresh steering currents.

Soft Chinese pricing data pushed oil prices down as well.

China’s April consumer price index rose 1.8% year-on-year, less than market expectations for a 2.0% gain, while the country’s producer price index fell 2.0%, more than market calls for a 1.9% contraction.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for June delivery were down 0.29% and trading at US$107.82 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.92 a barrel.

Natural Gas

In the wake of the American shale gas boom and the cheaper power that has resulted from that boom, U.S. manufacturers have been moving their work back home from overseas, and now foreign manufacturers, especially from Europe, are moving their facilities to the U.S.

While prices in the U.S. power market have fallen due to cheap natural gas, prices in Europe’s power market are much higher, lifted by subsidies for renewable wind and solar power projects. European utilities have been decommissioning thousands of gigawatts from turbines in an effort to minimize losses.

Natural gas prices fell on Friday as investors avoided the commodity after data release earlier this week revealed that stockpiles rose more than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in June traded at $4.517 per million British thermal units during U.S. trading, down 1.21%. The commodity hit session high of $4.598 and a low of $4.514.

The June contract settled down 3.54% on Thursday to end at $4.572 per million British thermal units.

Natural gas futures were likely to find support at $4.487 per million British thermal units, the low from April 17, and resistance at $4.825, Wednesday’s high.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending May 2 rose by 74 billion cubic feet, above forecasts for an increase of 71 billion cubic feet.

The numbers sent prices falling, as investors were betting that a recent cool snap would have hiked demand on expectations for demand for heating to rise.

The five-year average change for the week is a build of 58 billion cubic feet.

Total U.S. natural gas storage stood at 1.055 trillion cubic feet. Stocks were 797 billion cubic feet less than last year at this time and 982 billion cubic feet below the five-year average of 2.037 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 473 billion cubic feet below the five-year average, following net injections of 35 billion cubic feet.

Stocks in the Producing Region were 389 billion cubic feet below the five-year average of 844 billion cubic feet after a net injection of 27 billion cubic feet.

Producers would need to add 2.6 trillion to 2.9 trillion cubic feet to storage by November 1 to meet typical winter demand, analysts said.

Elsewhere, updated weather forecasting models called for a return of mild temperatures across the eastern half of the U.S. that should edge out a heat wave, which also watered down prices.

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.

Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.