Investing.com Weekly Wrap-Up 11 July 2014

U.S. stocks up on earnings, waning Portugal fears; Dow rises 0.17%

by Investing.com Staff, Investing.com

U.S. stocks rose on Friday on upbeat earnings from Wells Fargo, while hopes Portugal’s financial system remains sound also boosted stock prices.

At the close of U.S. trading, the Dow 30 rose 0.17%, the S&P 500 index rose 0.15%, while the NASDAQ Composite index rose 0.44%.

U.S. financial institution Wells Fargo & Company (NYSE:WFC) reported earlier that profits rose by 3% to $5.42 billion in the second quarter thanks to an improving housing sector and fewer bad loans, which drew applause on Wall Street, though caution remained as the bank’s revenue slipped albeit less than markets were expecting.

Earnings season will gain steam next week, and hopes for more pleasant surprises sent stocks gaining on Friday as did ebbing European financial concerns.

The parent company of Portugal’s largest bank, Banco Espirito Santo (LISBON:BES), said it missed some payments on commercial paper, which spooked markets by fueling concerns surrounding the soundness of the banking sectors in Portugal as well as in Spain and Italy.

By Friday, investors crept out of safe-harbor dollar positions and returned to both European and U.S. equities after Banco Espírito Santo sought to reassure markets that it had the funds to cover its parent company.

Portuguese government and central bank authorities sought to soothe global markets as well by assuring to the soundness of the country’s financial system.

Meanwhile in the U.S., solid jobless claims numbers released on Thursday boosted spirits on Friday.

The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending July 5 declined by 11,000 to 304,000. Analysts had expected jobless claims to hold steady at 315,000 last week.

Leading Dow Jones Industrial Average performers included Verizon Communications Inc (NYSE:VZ), up 1.38%, General Electric Company (NYSE:GE), up 1.32%, and Boeing Company (NYSE:BA), up 1.02%.

The Dow Jones Industrial Average’s worst performers included Chevron Corporation (NYSE:CVX), down 1.37%, Exxon Mobil Corporation (NYSE:XOM), down 0.81%, and Johnson & Johnson (NYSE:JNJ), down 0.68%.

European indices, meanwhile, ended the day higher.

After the close of European trade, the DJ Euro Stoxx 50 rose 0.12%, France’s CAC 40 rose 0.35%, while Germany’s DAX rose 0.07%. Meanwhile, in the U.K. the FTSE 100 rose 0.27%.

Forex

The dollar largely flat against most major currencies on Friday a session void of major economic indicators, as ongoing concerns Portugal’s financial sector may be in trouble fueled safe-harbor demand for the greenback, though reassuring words out of Lisbon steadied the euro and halted the U.S. currency’s advance.

In U.S. trading on Friday, EUR/USD was unchanged at 1.3608.

Disappointing euro zone factory data released Thursday watered down the euro earlier Friday, though the single currency did manage to take back earlier losses.

Italy’s industrial output unexpectedly fell 1.2% in May from April, defying expectations for a 0.2% expansion, while French industrial production plunged 1.7% in May, also confounding expectations for a 0.2% gain.

Financial concerns also pressured the euro down against the dollar.

The dollar was flat against the yen, with USD/JPY unchanged at 101.34, and flat against the Swiss franc, with USD/CHF down 0.01% at 0.8921.

The greenback was up against the pound, with GBP/USD down 0.11% at 1.7115.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.79% at 1.0734, AUD/USD down 0.08% at 0.9386 and NZD/USD down 0.12% at 0.8812.

Official data released earlier revealed that the number of employed people in Canada declined by 9,400 in June, defying expectations for a 20,000 rise after an increase of 25,800 in May.
The report also showed that Canada’s unemployment rate rose to 7.1% in June, from 7.0% the previous month. Analysts had expected the unemployment rate to remain unchanged last month.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 80.23.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) showed relatively minor moves of sentiment again this week. The euro and Japanese yen remained strongly bearish; the British pound remained strongly bullish, but less so than last week. Both the Australian and Canadian dollars remained strongly bullish. All sentiment is relative to the U.S. dollar.

Gold

Gold futures came off earlier highs and dipped into negative territory on Friday though the commodity remain stable on easing of fears that financial woes at Portugal’s largest bank may signify the euro zone periphery may be facing financial troubles anew.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,337.00 a troy ounce during U.S. trading, down 0.16%, up from a session low of $1,334.90 and off a high of $1,340.30.

The August contract settled up 1.13% at $1,339.20 on Thursday.

Futures were likely to find support at $1,312.10 a troy ounce, Monday’s low, and resistance at $1,346.80, Thursday’s high.

Gold prices shot up on safe-haven demand after the parent company of Portugal’s largest bank, Banco Espírito Santo, said earlier this week that it missed commercial paper payments.

The announcement rattled nerves across the globe, fueling concerns surrounding the soundness of the banking sectors in Portugal as well as in Spain and Italy.

By Friday, investors crept out of safe-harbor gold positions and returned to both European and U.S. equities after Banco Espírito Santo sought to reassure markets that it had the funds to cover its parent company.

Portuguese government and central bank authorities sought to soothe global markets as well by assuring the soundness of the country’s financial system.

Meanwhile, silver for September delivery was down 0.19% at $21.468 a troy ounce, while copper futures for September delivery were up 0.07% at $3.269 a pound.

Oil

Crude futures dropped on Friday as investors continued to unwind positions that priced in conflict-related supply disruptions in Libya and Iraq that never materialized.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in August traded at $101.00 a barrel during U.S. trading, down 1.88%. New York-traded oil futures hit a session low of $100.62 a barrel and a high of $102.92 a barrel.

The August contract settled up 0.63% at $102.93 a barrel on Thursday.

Nymex oil futures were likely to find support at $99.71 a barrel, the low from May 9, and resistance at $104.20 a barrel, Tuesday’s high.

Fears that military conflicts in the Middle East will disrupt supplies continued to abate on Friday, which sent oil prices falling.

Libya recently struck a deal with rebels occupying oil ports under terms that would have insurgents give up control over terminals that have been closed for a year.

The deal should add 500,000 barrels per day of crude back into the global energy market, and reports that shipments are on the rise already bruised oil prices on Friday.

Elsewhere, ongoing expectations for the Iraqi insurgency to remain to the north of the country’s oilfields also allowed prices to drop.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for August delivery were down 1.82% and trading at US$106.701 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$5.70 a barrel.

Natural Gas

Natural gas futures bounced back from six-month lows on Friday after bargain hunters snapped up nicely-priced positions in the commodity and reversed losses stemming from Thursday’s bearish supply report.

On the New York Mercantile Exchange, natural gas futures for delivery in August traded at $4.138 per million British thermal units during U.S. trading, up 0.44%. The commodity hit a session high of $4.158 and a low of $4.107.

The August contract settled down 1.20% on Thursday to end at $4.120 per million British thermal units.

Natural gas futures were likely to find support at $4.107 per million British thermal units, the earlier low, and resistance at $4.356, Monday’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 ending July 4 rose by 93 billion cubic feet, above expectations for an increase of 92 billion cubic feet.

The five-year average change for the week is an increase of 72 billion cubic feet.

Total U.S. natural gas storage stood at 2.022 trillion cubic feet. Stocks were 653 billion cubic feet less than last year at this time and 769 billion cubic feet below the five-year average of 2.791 trillion cubic feet for this time of year.

Gas prices fell on the numbers as well as weather forecasts calling for below-normal temperatures across portions of the eastern half of the U.S., though bottom fishers sent the commodity back into positive territory on Friday.