Investing.com Weekly Wrap-Up 03 October 2014

Wall St. rallies; S&P 500 posts best day since August

by Investing.com Staff, Investing.com

The S&P 500 posted its best day since August on Friday following a stronger-than-expected September U.S. jobs report that bolstered the outlook for the U.S. economy.

Despite the rally, however, major indexes ended down for the week, with the first diagnosis of Ebola in a patient in the United States and protests in Hong Kong among the main catalysts for sharp selling earlier in the week.

Read the rest of this Reuters article by Caroline Valetkevitch at the Investing.com website.

From the Investing .com staff:

At the close of U.S. trading, the Dow 30 rose 1.24%, the S&P 500index rose 1.12%, while the NASDAQ Composite index rose 1.03%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 9.16% at 14.68.

The Department of Labor reported earlier that the U.S. economy added 248,000 jobs in September, far more than the expected 215,000 increase. The number of jobs created in August was revised to 180,000 from a previous estimate of 142,000.

In addition, the U.S. unemployment rate ticked down to 5.9% last month from 6.1% in August.

Analysts had expected the rate to remain unchanged, and the numbers sparked a rally in the stock market by fueling expectations that stronger corporate earnings will accompany a more robust U.S. economy.

Elsewhere, the Institute of Supply Management said its non-manufacturing purchasing managers’ index slipped to 58.6 in September from a reading of 59.6 in August. Analysts had expected the index to fall to 58.5 last month, though investors shrugged off the data.

A separate report showed that the U.S. trade deficit narrowed to $40.10 billion in August from $40.30 billion in July, whose figure was revised from a previously estimated deficit of $40.60 billion.

Analysts had expected the trade deficit to widen to $40.90 billion in August.

Leading Dow Jones Industrial Average performers included Goldman Sachs Group Inc (NYSE:GS), up 2.81%, J P Morgan Chase & Co (NYSE:JPM), up 2.48%, and Walt Disney Company (NYSE:DIS), up 1.91%.

The Dow Jones Industrial Average’s worst performers included Caterpillar Inc (NYSE:CAT), down 0.02%, Chevron Corporation (NYSE:CVX), which was up 0.47%, and Pfizer Inc (NYSE:PFE), up 0.53%.

European indices, meanwhile, ended the day higher.

After the close of European trade, the DJ Euro Stoxx 50 rose 0.87%, France’s CAC 40 rose 0.92%, while German markets were closed on holiday. Meanwhile, in the U.K. the FTSE 100 rose 1.26%.

Forex

The U.S. dollar remained close to fresh four-year highs against a basket of other major currencies on Friday, as the release of strong U.S. employment report boosted demand for the greenback.

EUR/USD hit fresh two-year lows of 1.2505, and was last down 1.30% to trade at 1.2504.

The euro showed little reaction after official data showed that euro zone retail sales rose 1.2% in August, beating expectations for an uptick of 0.1%, after 0.4% fall in July.

Earlier Friday, Markit said the euro zone services purchasing managers’ index ticked down to 52.4 in September from 52.8 the previous month, confounding expectations for the index to remain unchanged.

Markit also reported that Germany’s services PMI rose to 55.7 last month from a reading of 55.4 in August, while France’s services PMI fell to 48.4 in September from 49.4 in August.

GBP/USD dropped 1.16% to 11-month lows at 1.5956, after Markit said the U.K. services PMI slipped to 58.7 in September from a reading of 60.5 the previous month. Analysts had expected the index to tick down to 59.1 last month.

USD/JPY jumped 1.30% to 109.86, re-approaching six-year peaks, while USD/CHF rallied 1.42% to fresh 14-month highs at 0.9675.

Elsewhere, AUD/USD hit four-year lows and was last down 1.72% at 0.8652. NZD/USD plunged 1.87% to trade at 0.7752, while USD/CADgained 0.91% to new six-month highs at 1.1259.

Official data showed that Canada’s trade balance swung into a deficit of C$0.61 billion in August from a surplus of C$2.20 billion in July, whose figure was revised from a previously estimated surplus of C$2.58 billion.

Analysts had expected the trade surplus to narrow to C$1.50 billion in August.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.30% to 86.85, the highest level since June 2010.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) – Bearishness continued for the euro and Japanese yen. But the biggest news this week was the big move for the S&P 500 back to bullish after only one week in bearish territory.

Gold

Gold futures fell to near 4-year lows on Friday after data revealed the U.S. picked up far more payrolls in September than expected, which sent investors betting the Federal Reserve may raise interest rates sooner than later.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,193.10 a troy ounce, down 1.81%, up from a session low of $1,190.40 and off a high of $1,215.80.

The December contract settled down 0.03% at $1,215.10 on Thursday.

Futures were likely to find support at $1,158.70 a troy ounce, the low from July 29, 2010, and resistance at $1,224.00, Thursday’s high.

Meanwhile, silver for December delivery was down 1.23% at $16.837 a troy ounce, while copper futures for December delivery were up 0.16% at $3.003 a pound.

Oil

A stronger-than-expected U.S. jobs report strengthened the dollar on Friday and sent crude prices dropping in a selloff exacerbated by concerns that global oil supply far exceeds demand.

A stronger greenback makes oil a less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in November traded down 1.15% at $89.96 a barrel during U.S. trading. New York-traded oil futures hit a session low of $89.38 a barrel and a high of $91.79 a barrel.

The November contract settled up 0.31% at $91.01 a barrel on Thursday.

Nymex oil futures were likely to find support at $88.18 a barrel, Thursday’s low, and resistance at $94.64 a barrel, Monday’s high.

Fears of a global supply glut pushed prices down as well as the strong employment and economic data from the U.S.

Earlier this week, Saudi Arabia cut the prices of the oil it ships to Asia to remain competitive and retain its market share, which added to fears that supply far outstrips demand due in large part to slumping European and Asian economies.

Separately, on the ICE Futures Exchange in London, Brent oil futures for November delivery were down 1.28% at US$92.23 a barrel, while the spread between Brent and U.S. crude contracts stood at US$2.27 a barrel.

Natural Gas

Natural gas prices jumped up on Friday after updated weather-forecasting models called for a cold snap to trek eastward across the U.S.

On the New York Mercantile Exchange, natural gas futures for delivery in November were up 1.95% at $4.009 per million British thermal units during U.S. trading. The commodity hit a session low of $3.946, and a high of $4.029.

The November contract settled down 2.26% on Thursday to end at $3.932 per million British thermal units.

Natural gas futures were likely to find support at $3.908 per million British thermal units, Thursday’s low, and resistance at $4.184, Wednesday’s high.

Natural gas prices rose after weather-forecasting services predicted a cool snap to trek across the northeastern U.S. in the coming days and drive demand for heating. Natgasweather.com reported in its Friday midday update:

“A strong weather system with heavy rains, strong thunderstorms, and even a few snowflakes continues to race across the Midwest with the trailing cold front pushing deep into the Gulf Coast. More importantly to the nat gas markets, temperatures will be 8-20F cooler than normal for much of the central and eastern U.S. the next few days.

“A secondary reinforcing surge of cooler Canadian air will arrive early next week and impact many of the same regions. After a brief warm up late next week, the pattern will again become active as additional Canadian cool blast line up and push deep into the central U.S. October 11-15th.

“The greatest forecast challenge remains over the eastern U.S. coast where warmer conditions are possible as cooler Canadian air struggles to advance east. This could bring slightly warmer than normal temperatures to the Southeast and eastern U.S. coastline. It should be mentioned Southern California will see a couple more days of hot temperatures as Los Angeles and San Diego reach the 90s to near 100F.”

Uncertainty as to how far east the cooler weather will make it managed to drive prices up by stoking expectations that warmer air will remain and drive demand for air conditioning.

Investors continued to digest Thursday’s weekly U.S. supply report, which sent prices plunging to levels ripe for profit taking.

The U.S. Energy Information Administration said Thursday that natural gas storage in the U.S. in the week ending Sept. 26 rose by 112 billion cubic feet, above expectations for an increase of 107 billion, which sent prices falling.

Inventories rose by 99 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 85 billion cubic feet.

Injections of gas into storage have surpassed the five-year average for 24 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 3.100 trillion cubic feet. Stocks were 373 billion cubic feet less than last year at this time and 399 billion cubic feet below the five-year average of 3.499 trillion cubic feet for this time of year.