Wall Street rallies but ends lower for week
by Investing.com Staff, Investing.com
U.S. stocks ended higher on Friday, with the S&P 500 rallying back above a key technical level, but the advance was not enough to offset recent declines and major
indexes closed out their worst week of the past eight.
The day’s gains were broad. While all ten primary S&P 500 sectors ended higher on the day, energy <.SPNY> was the top advancer, up 1.3 percent alongside a 1 percent rise in the price of crude oil .
Much of the advance came after a read on second-quarter GDP showed that the economy grew at its fastest pace in 2-1/2 years.
Equity markets have seen bigger moves of late, including a selloff on Thursday that was the S&P’s biggest one-day decline since July. In four of the past five sessions, the S&P posted a point move that was larger than its 14.6 point average over the past 250 sessions.
“It’s interesting to see this kind of rebound so quickly, but it shows you how skittish the market is, with volatility higher in both directions,” said Michael Mullaney, chief investment officer at Fiduciary Trust Co in Boston.
The S&P closed back above its 50-day moving average, which it had closed below on Thursday for the first time in more than a month. A protracted period under that level could have portended deeper losses ahead, but traders extended their recent trend of using market declines as buying opportunities. The S&P is about 1.4 percent below a record close hit earlier this month.
“Buyers are showing back up at the party,” said Mullaney, who helps oversee about $11.7 billion in assets. “The bottom line is that the outlook is still very solid, so it isn’t unusual to see traders come back in.”
The Dow Jones industrial average (DJI) rose 167.35 points, or 0.99 percent, to 17,113.15, the S&P 500 (SPX) gained 16.86 points, or 0.86 percent, to 1,982.85, and the Nasdaq Composite (IXIC) added 45.45 points, or 1.02 percent, to 4,512.19.
For the week, the Dow fell 1 percent, the S&P lost 1.4 percent and the Nasdaq shed 1.5 percent. It is the worst week for all three since the week ended Aug 1.
Nike Inc (NYSE:NKE) jumped 12 percent to $89.50 in its biggest one-day advance since October 2008. The Dow component hit a record high a day after earnings topped expectations, prompting more than a dozen brokers to raise their targets on the stock.
Micron Tech (NASDAQ:MU) jumped 6.7 percent to $33.83. It also reported better-than-expected results late Thursday.
On the downside, Universal Health Services Inc (NYSE:UHS) fell 2.4 percent to $109.03 after it agreed to buy Cygnet Health Care Ltd in a deal valued at about $335 million.
About 70 percent of stocks traded on the New York Stock Exchange closed higher on Friday, while 65 percent of Nasdaq-listed names ended in positive territory.
About 5.18 billion shares traded on all U.S. platforms, according to BATS exchange data, below the month-to-date average of 6.05 billion.
The Volatility S&P 500 index, which measures the outlook for market volatility, was down 5.31% at 14.81.
European indices, meanwhile, ended the day largely higher.
After the close of European trade, the DJ Euro Stoxx 50 rose 0.57%, France’s CAC 40 rose 0.91%, while Germany’s DAX fell 0.20%. Meanwhile, in the U.K. the FTSE 100 rose 0.15%.
The dollar firmed against most major currencies on Friday after data revealed the U.S. economy grew at a healthy pace in the second quarter of this year, which fueled already growing expectations that rate hikes will come sooner than later in 2015.
In U.S. trading on Friday, EUR/USD was down 0.57% at 1.2677.
The dollar advanced after the Commerce Department said U.S. gross domestic product expanded at an annual rate of 4.6% in the second quarter, in line with the consensus forecast, after contracting by 2.1% in the first three months of the year.
U.S. second quarter GDP was initially reported to have increased by 4.2%.
The positive data fueled already growing expectations for rate hikes to kick in earlier next year than once anticipated.
On Thursday, Dallas Federal Reserve President Richard Fisher said that the U.S. central bank may start raising interest rates around the spring of 2015, earlier than many market expectations.
Separately, the Thomson Reuters/University of Michigan final consumer sentiment index remained unchanged at 84.6 this month, just shy of expectations for an uptick to 84.7.
The euro, meanwhile, continued to come under pressure after European Central Bank President Mario Draghi reiterated on Thursday the bank’s commitment to act with more policy measures to boost inflation in the euro zone.
A day earlier, Mario Draghi had already vowed to keep monetary policy “accommodative” for as long as needed, and to use every tool at the ECB’s disposal to fight deflation.
Elsewhere on Friday, data revealed that the Gfk German consumer climate index ticked down to 8.3 this month from 8.6 in August. Analysts had expected the index to slip to 8.5, and the weaker-than-expected figure softened the single currency alongside robust U.S. data.
The dollar was up against the yen, with USD/JPY up 0.51% at 109.29, and up against the Swiss franc, with USD/CHF up 0.52% at 0.9516.
The greenback was up against the pound, with GBP/USD down 0.43% at 1.6246.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.44% at 1.1157, AUD/USD down 0.25% at 0.8766 and NZD/USD down 0.71% at 0.7869.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.52% at 85.78.
Commitments of Traders data from the CFTC (Commodity Future Trading Commission) – Bearishness increased again for the euro and Japanese yen. The biggest change this week was the switch from bullish to bearish sentiment for the S&P 500.
Gold futures fell on Friday after upbeat U.S. growth sent both the dollar and U.S. stock indices rising.
Gold and the greenback tend to trade inversely with one another, while the precious metal often serves as a safe-haven hedge in times of Wall Street selloffs.
On the Comex division of the New York Mercantile Exchange, goldfutures for December delivery traded at 1,215.20 a troy ounce during U.S. trading, down 0.55%, up from a session low of $1,213.00 and off a high of $1,231.70.
The December contract settled up 0.20% at $1,221.90 on Thursday.
Futures were likely to find support at $1,206.60 a troy ounce, Thursday’s low, and resistance at $1,237.00, Tuesday’s high.
Gold prices took a dive as the dollar rose after the Commerce Department said U.S. gross domestic product expanded at an annual rate of 4.6% in the second quarter, in line with the consensus forecast, after contracting by 2.1% in the first three months of the year.
U.S. second quarter GDP was initially reported to have increased by 4.2%.
The positive data fueled already growing expectations for rate hikes to kick in earlier next year than once anticipated, which would chip away at gold’s appeal as a hedge to a weaker dollar in times of low borrowing costs.
On Thursday, Dallas Federal Reserve President Richard Fisher said that the U.S. central bank may start raising interest rates around the spring of 2015, earlier than many market expectations.
Separately, the Thomson Reuters/University of Michigan final consumer sentiment index remained unchanged at 84.6 this month, just shy of expectations for an uptick to 84.7.
Elsewhere, stocks rose on Friday after investors applauded the upbeat U.S. GDP report, which took its toll on gold.
On Thursday, stocks dropped on fears Russia may give its courts the green light to freeze foreign assets, a potentially tit-for-tat move in response to Western sanctions slapped on Moscow for allegedly meddling in the Ukraine crisis.
Meanwhile, silver for December delivery was up 0.54% at $17.533 a troy ounce, while copper futures for December delivery were up 0.25% at $3.038 a pound.
Crude futures rose on Friday after data revealed the U.S. economy expanded at a healthy pace in the second quarter, while concerns U.S.-led airstrikes targeting ISIS insurgents in the Middle East will disrupt oil exports pushed up prices as well.
In the New York Mercantile Exchange, West Texas Intermediate Crude oil for delivery in November traded up 0.69% at $93.17 a barrel during U.S. trading. New York-traded oil futures hit a session low of $92.24 a barrel and a high of $93.32 a barrel.
The November contract settled down 0.29% at $92.53 a barrel on Thursday.
Nymex oil futures were likely to find support at $90.41 a barrel, Monday’s low, and resistance at $94.12 a barrel, the high from Sept. 16.
Oil prices rose on sentiments that an expanding U.S. economy will consume more fuel and energy.
The Commerce Department reported earlier that U.S. gross domestic product expanded at an annual rate of 4.6% in the second quarter, in line with the consensus forecast, after contracting by 2.1% in the first three months of the year.
U.S. second quarter GDP was initially reported to have increased by 4.2%.
Separately, the Thomson Reuters/University of Michigan final consumer sentiment index remained unchanged at 84.6 this month, just shy of expectations for an uptick to 84.7, though not soft enough to seriously dampen spirits in energy markets.
Geopolitical events pushed up crude as well.
Reports that a U.S.-led airstrikes targeting ISIS position have hit oil facilities in Syria pushed up prices by fueling fears exports from the region will be affected, especially if Iraqi oilfields are affected.
Still, oil didn’t surge on Friday amid ongoing sentiments that the world is awash in crude at a time where demand remains soft due to headwinds slowing Chinese and European economies, which took its toll on Brent futures.
Separately, on the ICE Futures Exchange in London, Brent oil futures for November delivery were down 0.16% at US$96.85 a barrel, while the spread between Brent and U.S. crude contracts stood at US$3.68 a barrel.
Natural gas prices moved up and down on Friday after updated weather-forecasting models called for mild temperatures in the coming days, which should curb demand for both air conditioning and heating.
Trading was choppy, however, as longer-term models predicted significant cooling in the eastern U.S. later in October.
On the New York Mercantile Exchange, natural gas futures for delivery in November were up 0.39% at $4.030 per million British thermal units during U.S. trading. The commodity hit a session low of $3.970, and a high of $4.034.
The November contract settled up 1.24% on Thursday to end at $4.014 per million British thermal units.
Natural gas futures were likely to find support at $3.845 per million British thermal units, Tuesday’s low, and resistance at $4.100, the high from Sept. 17.
Natural gas futures dipped lower as markets prepped for seasonably mild temperatures to trek across the eastern U.S., though the prospects of much colder air following suit in October boosted the commodity back into positive territory in choppy trading.
Natgasweather.com reported in its midday update for Friday:
“What will be important to the markets is what happens late next week when a colder Canadian weather system tracks across the northern Rockies and towards the Midwest. It most certainly will bring a cool down where overnight lows will be near freezing and daytime highs struggle to get out of the 40s and 50s.
“This will certainly ease strong bearish weather headwinds as modest demand for heating will occur. More importantly, this will be the first real test to see just how sensitive the markets are to colder temperatures.”
A lackluster supply report allowed for choppy trading as well.
The Energy Information Administration reported on Thursday that U.S. Natural Gas Storage rose by 97 billion cubic feet last week compared to 90 billion in the week before.
Analysts had expected U.S. Natural Gas Storage to rise by 94 billion cubic feet last week.
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