Investing.com Weekly Wrap-Up 27 June 2014

U.S. stocks up on Fed outlook, DuPont forecast weighs; Dow rises 0.03%

by Investing.com Staff, Investing.com

U.S. stocks rose on Friday on market expectations for interest rates to remain low for the foreseeable future, though end-of-quarter profit taking and a DuPont profit revision watered down gains.

At the close of U.S. trading, the Dow 30 rose 0.03%, the S&P 500 index rose 0.19%, while the NASDAQ Compositeindex rose 0.43%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 3.18% at 11.26, but up from 10.26 one week ago.

On Thursday, St. Louis Federal Reserve President James Bullard told Fox Business Network that an improving economy may make conditions ripe for interest rates to rise possibly in early 2015.

Stocks fell on the news, though investors digested Bullard’s comments and took them in stride, as he is a known inflation hawk and is a non-voting member of the Federal Open Market Committee, which sent share prices rising on Friday

Better-than-expected earnings from shoemaker Nike Inc (NYSE:NKE) pushed up equities as did upbeat U.S. data.

The revised Thomson Reuters/University of Michigan consumer sentiment index rose to 82.5 in June from 81.2 in May, beating expectations for a 82.2 reading.

Typical end-of-quarter selling capped gains, however.

Elsewhere, Dupont Fabros Technology Inc (NYSE:DFT) trimmed its operating profit outlook for the second quarter and full year, which also dampened spirits.

Leading Dow Jones Industrial Average performers included Microsoft Corporation (NASDAQ:MSFT), up 0.76%, Nike Inc (NYSE:NKE), up 0.65%, and Walt Disney Company (NYSE:DIS), up 0.49%.

The Dow Jones Industrial Average’s worst performers included Dupont Fabros Technology Inc (NYSE:DFT), down 3.34%, Merck & Company Inc (NYSE:MRK), down 1.71%, and Exxon Mobil Corporation (NYSE:XOM), down 0.80%.

European indices, meanwhile, ended the day mixed.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.14%, France’s CAC 40 fell 0.06%, while Germany’s DAX rose 0.10%. Meanwhile, in the U.K. the FTSE 100 rose 0.34%.

Forex

The dollar traded largely lower against most major currencies on Friday as markets shrugged off hawkish comments from a Federal Reserve official and bet that benchmark interest rates will stay low well into 2015.

In U.S. trading on Friday, EUR/USD was up 0.25% at 1.3645.

The dollar fell on Friday after markets bet the Federal Reserve will keep interest rates low for some time to come.

In the euro zone, preliminary data on Friday showed that German consumer price inflation rose 0.3% this month, more than the expected 0.2% gain, after a 0.1% fall in May.

A separate report showed that Spain’s CPI rose at an annual rate of 0.1% in June, compared to expectations for a 0.3% rise, after a 0.2% increase in May.

Official data earlier showed that French consumer spending rose 1% in May, exceeding expectations for a 0.4% gain, after a 0.2% fall in April, whose figure was revised from a previously estimated 0.3% decline.

The dollar was down against the yen, with USD/JPY down 0.33% at 101.39, and down against the Swiss franc, with USD/CHF down 0.28% at 0.8911.

In Japan, official data earlier showed that household spending dropped by an annual rate of 8.0% last month, compared to expectations for a 2.0% decline, after a 4.6% fall in April.

Data also showed that Tokyo core consumer price inflation, which excludes food, remained unchanged at an annual rate of 2.8% in June, in line with expectations.

In addition, a government report showed that Japan retail sales fell 0.4% in May compared to a year earlier, less than the expected 1.8% decline and after a 4.4% drop in April.

The greenback was up against the pound, with GBP/USD down 0.04% at 1.7019.

The Office for National Statistics said U.K. gross domestic product expanded by 0.8% in the first quarter, in line with market expectations.

A separate report showed that the U.K. current account deficit narrowed to £18.5 billion in the three months to April, from £23.5 billion in the fourth quarter of 2013 whose figure was revised down from a previously estimated deficit of £22.4 billion.

Analysts had expected the current account deficit to narrow to £17.5 billion in the first quarter.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.24% at 1.0663, AUD/USD up 0.05% at 0.9420 and NZD/USD down 0.07% at 0.8774.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.21% at 80.10.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) showed a dramatic decrease in bearishness for the Canadian dollar, a slight decrease in bearishness for the euro and a slight increase in bullishness for the Australian dollar. The Swiss frank reversed from slightly bullish to slightly bearish. All changes are relative to one week ago.

Gold

Gold futures rose on Friday as the dollar fell amid market sentiment that the Federal Reserve will keep interest rates low well into 2015 despite comments from the head of the U.S. central bank’s St. Louis branch suggesting otherwise.

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

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,319.50 a troy ounce during U.S. trading, up 0.19%, up from a session low of $1,313.60 and off a high of $1,323.10.

The August contract settled down 0.42% at $1,317.00 on Thursday.

Futures were likely to find support at $1,305.40 a troy ounce, Tuesday’s low, and resistance at $1,326.60, Tuesday’s high.

While economic indicators point to a U.S. economy that is continues to improve, market expectations persist that interest rates will remain low in order to ensure recovery remains on track, putting pressure on the dollar and supporting gold.

Meanwhile, silver for September delivery was down 0.10% at $21.140 a troy ounce, while copper futures for September delivery were down 0.18% at $3.166 a pound.

Oil

Crude oil futures fell on Friday, to trade near two-week lows as disappointing U.S. spending data sparked concerns over the outlook for demand from the world’s top consumer of oil.

On the New York Mercantile Exchange, U.S. crude oil for delivery in August traded at $105.62 a barrel during European morning trade, down 0.21%.

Prices dropped 0.62% on Thursday to settle at $105.84.

Futures were likely to find support at $103.59 a barrel, the low from June 12 and resistance at $106.81, Thursday’s high.

On Thursday, data showed that U.S. personal spending rose 0.2% last month, below expectations for an increase of 0.4%. Personal spending for April was revised to a flat reading from a previously reported decline of 0.1%.

At the same time, the U.S. Department of Labor showing that the number of individuals filing for initial jobless benefits in the week ending June 21 declined by 2,000 to 312,000 from the previous week’s revised total of 314,000.

Oil prices remained under pressure after data on Wednesday showed that the U.S. economy shrank at an annual rate of 2.9% in the first three months of the year, compared to the consensus forecast for a decline of 1.7%.

U.S. first quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%.

The difference between the second and third estimate was the largest since records began in 1976, the Commerce Department said.

Elsewhere, on the ICE Futures Exchange, Brent oil for August delivery fell 0.17% to trade at $113.02 a barrel, with the spread between the Brent and crude contracts standing at $7.4 a barrel.

Natural Gas

Natural gas futures carried Thursday’s losses into Friday after official data revealed U.S. inventories rose more than markets were expecting last week.

On the New York Mercantile Exchange, natural gas futures for delivery in August traded at $4.393 per million British thermal units during U.S. trading, down 1.09%. The commodity hit a session high of $4.466 and a low of $4.376.

The August contract settled down 2.80% on Thursday to end at $4.441 per million British thermal units.

Natural gas futures were likely to find support at $4.364 per million British thermal units, the low from May 27, and resistance at $4.608, 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 June 20 rose by 110 billion cubic feet, above forecasts for an increase of 102 billion cubic feet.

The five-year average build for the week is 81 billion.

Total U.S. natural gas storage stood at 1.829 trillion cubic feet. Stocks were 690 billion cubic feet less than last year at this time and 822 billion cubic feet below the five-year average of 2.651 trillion cubic feet for this time of year.

Natural gas stockpiles have grown by more than 100 billion cubic feet for seven consecutive weeks, a record streak since 1994.

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