Investing.com Weekly Wrap-Up 30 May 2014

U.S. stocks rise, market shrugs off sentiment data; Dow up 0.11%

by Investing.com Staff, Investing.com

Wall Street blew off soft consumer spending and personal spending reports on Friday, as investors viewed the data as disappointing but nothing suggesting recovery was beginning to wane, which gave share prices room to finish the day largely higher.

At the close of U.S. trading, the Dow 30 rose 0.11%, the S&P 500 index rose 0.18%, while the NASDAQ Composite index fell 0.13%.

The housing sector, which threw the U.S. economy into the worst downturn since the Great Depression and lagged on its recovery for years, is on the mend according to new data for April new home sales from the U.S. Census Bureau and for existing home sales from NAR (National Association of Realtors.

The Volatility S&P 500 index, which measures market volatility, was down 1.47% at 11.40.

The revised Thomson Reuters/University of Michigan consumer sentiment index ticked up to 81.9 this month from 81.8 in April, missing market expectations for a reading of 82.5.

While harsh winter weather dampened spirits, concerns wages will remain weak did more so.

“The May decline in consumer confidence was not due to the dismal state of the economy during the 1st quarter, which had the weakest pace of GDP growth in three years. Consumers thought the harsh winter weather was mainly responsible,” the indicator’s statement read.

Consumer sentiment could suffer more if the economy failed to rebound in the months ahead, though the survey revealed that consumers feel the economy will be strong enough to produce more jobs in the year ahead, which drew applause on Wall Street, though wage concerns capped gains.

“The main concern expressed by consumers involved dismal prospects for wage growth. Tiny wage gains meant that nearly half of all households anticipated declines in inflation-adjusted incomes during the year ahead,” the statement read.

Elsewhere, the Commerce Department reported that personal spending in the U.S. fell 0.1% last month, compared to expectations for a 0.2% rise, after a 1.0% increase in March, whose figure was revised from a previously estimated 0.9% gain.

U.S. core personal consumption expenditures, which exclude food and energy, rose 0.2% in April, in line with expectations, after a 0.2% increase the previous month.

Separately, industry data revealed that the Chicago purchasing managers’ index rose to a seven-month high of 65.5 in May, from 63.0 in March, confounding expectations for a fall to 61.0.

On Thursday, the Bureau of Economic Analysis reported that the U.S. economy contracted 1.0% in the first quarter after a preliminary estimate showed growth of 0.1%.

Market expectations had been for a 0.5% contraction. It was the first decline in GDP since the first quarter of 2011, though still, many investors viewed the numbers as potholes in the road to U.S. recovery, with little evidence to suggest a major cool down is on the way.

Leading Dow Jones Industrial Average performers included Microsoft Corporation (NASDAQ:MSFT), up 1.45%, Intel Corporation (NASDAQ:INTC), up 1.28%, and Wal-Mart Stores Inc (NYSE:WMT), up 1.03%.

The Dow Jones Industrial Average’s worst performers included Caterpillar Inc (NYSE:CAT), down 1.34%, Exxon Mobil Corporation (NYSE:XOM), down 0.74%, and The Travelers Companies Inc (NYSE:TRV), down 0.69%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.02%, France’s CAC 40 fell 0.24%, while Germany’s DAX rose 0.04%. Meanwhile, in the U.K. the FTSE 100 fell 0.39%.

Forex

The dollar traded lower against most major currencies on Friday after U.S. consumer sentiment and personal spending numbers disappointed investors just one day after data revealed the U.S. economy contracted more than expected in the first quarter of the year.

In U.S. trading on Friday, EUR/USD was up 0.22% at 1.3632.

In Europe official data showed that German retail sales fell 0.9% last month, confounding expectations for a 0.4% rise, after a 0.1% uptick in April, whose figure was revised from a previously estimated 0.7% fall.

The dollar was flat against the yen, with USD/JPY trading at 101.79 and down against the Swiss franc, with USD/CHF down 0.30% at 0.8954.

The greenback was down against the pound, with GBP/USD up 0.28% at 1.6763.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.06% at 1.0842, AUD/USD down 0.01% at 0.9307 and NZD/USD up 0.08% at 0.8493.

In Canada, official data showed that the gross domestic product expanded by 0.1% in March, in line with market expectations, after a 0.2% expansion in February.

A separate report showed that raw materials prices rose 0.1% in April, disappointing expectations for a 1.2% increase, after an upwardly revised 0.7% gain the previous month.

Earlier Friday, data showed that building consents in New Zealand rose 1.5% in April, confounding expectations for a 3.5% drop, after an upwardly revised 9.2% increase in March.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.12% at 80.43.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) shpwed increased bearishness for the yen, the euro and the Swiss franc.

Gold

Gold futures fell on Friday despite less-than-stellar U.S. economic indicators, as markets bet the U.S. economy continues to recover and is in less need of monetary support from the Federal Reserve.

Monetary stimulus tools such as the Fed’s monthly asset-purchasing program weaken the dollar by suppressing longer-term interest rates, making gold an attractive hedge as long as they remain in place.

On the Comex division of the New York Mercantile Exchange, goldfutures for August delivery traded at 1,245.40 a troy ounce during U.S. trading, down 0.93%, up from a session low of $1,242.50 and off a high of $1,260.60.

The August contract settled down 0.21% at $1,257.10 on Thursday.

Futures were likely to find support at $1,237.50 a troy ounce, the low from Jan. 30, and resistance at $1,304.10, last Thursday’s high.

Gold ignored weak data over the last several days, as the U.S. economy continues to recover, which will steer investors’ attention to stocks and base metals.

Technical selling and waning physical demand in Asia sent prices falling as well.

Meanwhile, silver for July delivery was down 1.75% at $18.682 a troy ounce, while copper futures for July delivery were down 0.66% at $3.124 a pound.

Oil

Crude oil futures fell on Friday after investors locked in gains from Thursday’s bullish supply report and sold the commodity for profits.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in July traded at $102.79 a barrel during U.S. trading, down 0.76%. New York-traded oil futures hit a session low of $102.42 a barrel and a high of $103.60 a barrel.

The July contract settled up 0.84% at $103.58 a barrel on Thursday.

Nymex oil futures were likely to find support at $101.27 a barrel, the low from May 15, and resistance at $104.50 a barrel, Tuesday’s high.

The U.S. Energy Information Administration reported on Thursday that crude oil inventories rose by 1.657 million barrels last week after falling 7.226 million barrels the week before.

Analysts were expecting crude inventories to rise by 483,000 barrels, though the greater-than-expected build didn’t send prices falling due to bullish gasoline figures, which sent prices rising to levels ripe for profit taking.

Gasoline Inventories fell by 1.803 million barrels last week after rising 970,00 barrels the week before.

Analysts were expecting gasoline inventories to rise by 283,000 barrels.

In addition, a mixed bag of U.S. economic indicators softened demand for oil as well.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for July delivery were down 0.52% and trading at US$109.40 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$6.61 a barrel.

Natural Gas

Natural gas futures carried Thursday’s losses into Friday after official data revealed U.S. stockpiles rose more than markets were expecting last week, though prices steadied in afternoon trading.

On the New York Mercantile Exchange, natural gas futures for delivery in July traded at $4.552 per million British thermal units during U.S. trading, down 0.16%. The commodity hit a session high of $4.592 and a low of $4.490.

The July contract settled down 1.21% on Thursday to end at $4.559 per million British thermal units.

Natural gas futures were likely to find support at $4.364 per million British thermal units, Tuesday’s low, and resistance at $4.665, Thursday’s high.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ended May 23 rose by 114 billion cubic feet, above forecasts for an increase of 110 billion cubic feet.

Inventories rose by 88 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 93 billion cubic feet.

Total U.S. natural gas storage stood at 1.380 trillion cubic feet. Stocks were 748 billion cubic feet less than last year at this time and 922 billion cubic feet below the five-year average of 2.302 trillion cubic feet for this time of year.

Producers would need to add approximately 2.5 trillion cubic feet to storage by November 1 to meet typical winter demand, analysts said.

Meanwhile, market players prepped for the arrival of summertime temperatures in the U.S., which should hike demand for air conditioning.

Updated weather-forecasting models called for above-normal temperatures to settle in across parts of the lower 48 U.S. states through the first week of June, which sent natural gas prices rising earlier this week, though Thursday’s supply data sparked a round of profit taking that carried into Friday.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.