Investing.com Weekly Wrap-Up 18 July 2014

U.S. stocks rebound on earnings; Dow rises 0.73%

by Investing.com Staff, Investing.com

Upbeat earnings reports from Google Inc (NASDAQ:GOOGL) and others sent U.S. stock prices rebounding on Friday as investors brushed off geopolitical tensions in Ukraine and in Gaza.

At the close of U.S. trading, the Dow 30 rose 0.73%, the S&P 500 index rose 1.03%, while the NASDAQ Composite index rose 1.57%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 16.30% at 12.17.

Despite U.S. accusations that pro-Russian separatists shot down a Malaysian Airlines plane and an ongoing Israeli ground offensive in Gaza, investors jumped in from the sidelines and went long on stocks, optimistic over upbeat earnings from tech bellwether Google.

Google’s net income missed expectations in the second quarter due to heavy spending but a 22% jump in revenue to $16 billion drew applause on Wall Street.

General Electric Company (NYSE:GE) drew applause after reporting earnings and revenue figures that pleased investors, especially due to business in the company’s industrial concerns even though the company finished the day in negative territory.

Investors shrugged off a consumer sentiment report that missed expectations.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index fell to a four-month low of 81.3 in July from 82.5 in June, confounding expectations for rise to 83.0.

Leading Dow Jones Industrial Average performers included Johnson & Johnson (NYSE:JNJ), up 1.43%, Boeing Company (NYSE:BA), up 1.39%, and Nike Inc (NYSE:NKE), up 1.30%.

The Dow Jones Industrial Average’s worst performers included General Electric Company (NYSE:GE), down 0.58%, International Business Machines (NYSE:IBM), down 0.11%, and Intel Corporation (NASDAQ:INTC), which was up 0.13%.

European indices, meanwhile, ended the day largely higher.

After the close of European trade, the DJ Euro Stoxx 50 rose 0.08%, France’s CAC 40 rose 0.44%, while Germany’s DAX fell 0.35%. Meanwhile, in the U.K. the FTSE 100 rose 0.17%.

Forex

The dollar edged up against most major currencies on Friday after taking a bruising on fears that unrest in Ukraine and Gaza will slow U.S. recovery, though gains were cautious.

In U.S. trading on Friday, EUR/USD was unchanged at 1.3526.

Investors finished the week digesting the fallout from a downed Malaysian Airlines flight over Ukraine, with the U.S. blaming Ukrainian pro-Russian separatists for shooting down the aircraft, killing 298 aboard.

Concerns that fresh rounds off sanctions could be slapped on Russia in wake of the incident softened the dollar earlier by fueling fears the fallout will weigh on global recovery, thus prompting the Federal Reserve to keep policy loose for longer than once anticipated.

U.S. President Barack Obama said Friday, however, that sanctions were aimed at having minimal impacts on the global economy, which gave the dollar some support, though gains were minimal due to uncertainty in the Middle East, where Israel’s ground offensive in Gaza continued.

The IDF said on its website Thursday:

“Following ten days of Hamas attacks by land, air and sea, and after repeated rejections of offers to deescalate the situation, the Israel Defense Forces (IDF) has initiated a ground operation within the Gaza Strip.”

Disappointing U.S. sentiment data allowed for cautious trading.

The dollar was down against the yen, with USD/JPY up 0.18% at 101.35, and up against the Swiss franc, with USD/CHF up 0.10% at 0.8982.

The greenback was up against the pound, with GBP/USD down 0.08% at 1.7086.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.21% at 1.0737, AUD/USD up 0.45% at 0.9394 and NZD/USD up 0.23% at 0.8688.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 80.60.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) showed very 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. The Australian dollar, British pound and Mexican peso remained strongly bullish. All sentiment is relative to the U.S. dollar.

Gold

Profit taking sent gold prices edging lower on Friday, wiping out gains from fears that the downing of a Malaysian Airlines plane over Ukraine and an Israeli ground offensive in Gaza will dampen global economic recovery, keep the dollar weak and make gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,310.50 a troy ounce during U.S. trading, down 0.49%, up from a session low of $1,305.20 and off a high of $1,325.30.

The August contract settled up 1.32% at $1,316.90 on Thursday.

Futures were likely to find support at $1,292.60 a troy ounce, Tuesday’s low, and resistance at $1,325.90, Thursday’s high.

Gold prices rose on news of Malaysian Airlines crash in Ukraine, with the U.S. blaming Ukrainian pro-Russian separatists for shooting down the aircraft, killing 298 aboard, while an Israeli ground offensive in Gaza also boosted the precious metal.

Concerns that even more sanctions may be slapped on Russia in wake of the incident softened the dollar and bolstered gold by fueling fears the fallout will weigh on global recovery, thus prompting the Federal Reserve and central banks around the world to keep policy loose for longer than once anticipated.

Gold and the dollar tend to trade inversely with one another

U.S. Barack President Obama said Friday, however, that sanctions were aimed at having minimal impacts on the global economy, which opened the door for profit taking and sent gold prices lower.

Disappointing U.S. sentiment data also fueled Friday’s profit taking.

Meanwhile, silver for September delivery was down 1.12% at $20.898 a troy ounce, while copper futures for September delivery were down 0.99% at $3.189 a pound.

Oil

Crude futures slid on Friday after investors locked in gains from concerns geopolitical tensions in Ukraine and in Israel will disrupt supplies and sold the commodity for profits.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in August traded down 0.06% at $103.13 a barrel during U.S. trading. New York-traded oil futures hit a session low of $102.59 a barrel and a high of $103.94 a barrel.

The August contract settled up 1.97% at $103.19 a barrel on Thursday.

Nymex oil futures were likely to find support at $99.01 a barrel, Tuesday’s low, and resistance at $103.90 a barrel, Thursday’s high.

Oil prices shot up on news that a Malaysian Airlines plane was shot down over Ukraine, with the U.S. blaming pro-Russian separatist for the act.

Elsewhere, Israel launched a ground offensive in Gaza to quell rocket attacks.

Fears of Russian and Mideast supply disruptions sent oil posting strong gains until profit taking sent the commodity back into negative territory on Friday.

Disappointing U.S. sentiment data softened oil prices as well.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for September delivery were down 0.47% and trading at US$107.38 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$4.25 a barrel.

Natural Gas

Natural gas carried Thursday’s losses into Friday after data revealed that U.S. natural gas supplies rose more than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in August traded at $3.940 per million British thermal units during U.S. trading, down 0.37%. The commodity hit a session high of $3.976 and a low of $3.936.

The August contract settled down 4.01% on Thursday to end at $3.954 per million British thermal units.

Natural gas futures were likely to find support at $3.936 per million British thermal units, the session low, and resistance at $4.173, 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 ended July 11 rose by 107 billion cubic feet, well above market expectations for an increase of 98 billion cubic feet.

The five-year average change for the week is an increase of 65 billion cubic feet.

Total U.S. natural gas storage stood at 2.129 trillion cubic feet. Stocks were 608 billion cubic feet less than last year at this time and 727 billion cubic feet below the five-year average of 2.856 trillion cubic feet for this time of year.

Natural gas prices have come under pressure in recent sessions after cooler temperatures moved over heavily-populated Midwest and Northeast regions.

Cool snaps in the U.S. summertime send natural gas prices falling on concerns households will throttle back on their air conditioning and curb demand for the commodity.