Investing.com Weekly Wrap-Up 17 October 2014

Wall St. gains one percent Friday on results but S&P down for fourth week

by Investing.com Staff, Investing.com

U.S. stocks jumped up on Friday on better-than-expected earnings and on data revealing U.S. consumer sentiment made its biggest jump since July of 2007.

At the close of U.S. trading, the Dow 30 rose 1.63%, the S&P 500 index rose 1.29%, while the NASDAQ Composite index rose 0.97%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 12.74% at 21.99.

Stocks rallied earlier after Morgan Stanley (NYSE:MS) and General Electric Company (NYSE:GE) released earnings that beat market expectations, while a cheery consumer sentiment report fueled demand for equities as well.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to a seven-year high 86.4 for October from 84.6 in September. Analysts had expected the index to slip to 84.1 in October, and the surprise firmed the dollar.

Elsewhere, mixed housing data failed to bring broader stock indices down.  The Census Bureau reported that U.S. building permits rose 1.5% to 1.018 million in September, disappointing expectations for an increase of 2.8% to 1.0.29 million units, after a 5.1% drop to 1.003 million units in August.

Construction on new homes, however, drew applause.

The report also showed that U.S. housing starts rose 6.3% in September to 1.017 million units, beating expectations for a 4.8% gain. Housing starts for August were revised to a 12.8% fall from a previously estimated 14.4% decline.

Leading Dow Jones Industrial Average performers included UnitedHealth Group Incorporated (NYSE:UNH), up 3.30%, American Express Company (NYSE:AXP), up 2.95%, and Walt Disney Company (NYSE:DIS), up 2.53%.

The Dow Jones Industrial Average’s worst performers included Nike Inc (NYSE:NKE), up 0.17%, Wal-Mart Stores Inc (NYSE:WMT), up 0.41%, and Pfizer Inc (NYSE:PFE), up 0.45%.

European indices, meanwhile, ended the day higher on expectations for new European Central Bank stimulus reports.

After the close of European trade, the DJ Euro Stoxx 50 rose 3.05%, France’s CAC 40 rose 2.92%, while Germany’s DAX rose 3.12%. Meanwhile, in the U.K. the FTSE 100 rose 1.85%.

Forex

A better-than-expected U.S. consumer sentiment report sent the dollar firming against most major currencies on Friday, as investors bet the Federal Reserve remains on track to close stimulus programs this month and raise interest rates in 2015.

In U.S. trading on Friday, EUR/USD was down 0.28% at 1.2772.

Despite hiccups here and there, the U.S. economy is improving, and many investors are betting the Federal Reserve will conclude its monthly bond-buying program this month and raise interest rates in 2015, which should give the dollar support.

Elsewhere, the Census Bureau reported mixed U.S. housing data, which capped the greenback’s gains.

Meanwhile, the euro continued to come under pressure amid growing concerns over the threat of deflation in the euro zone after revised data on Thursday showed that bloc’s consumer price inflation rose by 0.3% in September, in line with expectations though soft nonetheless.

The rate has now been below 1% for 12 straight months, well under the European Central Bank’s target of near but just under 2%.

The dollar was up against the yen, with USD/JPY up 0.33% at 106.69, and up against the Swiss franc, with USD/CHF up 0.33% at 0.9457.

The greenback was down against the pound, with GBP/USD up 0.13% at 1.6110.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.15% at 1.1273, AUD/USD up 0.04% at 0.8760 and NZD/USD down 0.34% at 0.7926.

The loonie saw support after Statistics Canada reported that the country’s consumer price index rose 0.1% last month, beating expectations for a flat reading and up from a flat reading in August.

Core consumer price inflation, which excludes the eight most volatile items, increased by 0.2% in September, more than the expected 0.1% rise, after a 0.5% gain the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.27% at 85.25.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) – Bearishness increased for the euro and and the Canadian dollar but eased a little for the Japanese yen. Most other futures tracked below showed minor changes except for significant decrease in bullishness for the S&P 500 and a significant increase in bullishness for gold.

Gold

Gold futures traded slightly lower on Friday after a better-than-expected report on U.S. consumer sentiment bolstered the dollar, though concerns the global economy is battling headwinds gave the precious metal some support.

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

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1,239.80 a troy ounce, down 0.11%, up from a session low of $1,232.20 and off a high of $1,242.10.

The December contract settled down 0.29% at $1,241.20 on Thursday.

Futures were likely to find support at $1,222.00 a troy ounce, Wednesday’s low, and resistance at $1,245.60, Thursday’s high.

Improvement in U.S. consumer sentiment boosted the dollar and dampened gold while mixed data on U.S. housing appeared to have little affect.

Despite the overall positive U.S. data, gold’s losses were limited, as concerns persisted that cooling European and Asian economies may drag on U.S. recovery and convince the Fed to raise interest rates later than once anticipated.

Official data released on Wednesday showed that Chinese inflation for September slowed to 1.6% on-year from 2.0% in August, below expectations for a reading of 1.7%.

The weaker-than-expected data underlined concerns about China’s economy and sparked speculation policymakers in Beijing will have to introduce fresh stimulus to meet the government’s 7.5% growth target.

In Europe this week, revised data showed that bloc’s consumer price index rose by 0.3% in September, in line with expectations though soft nonetheless.

The rate has now been below 1% for 12 straight months, well under the European Central Bank’s target of near but just under 2%.

Meanwhile, silver for December delivery was down 0.57% at $17.337 a troy ounce, while copper futures for December delivery were up 0.71% at $3.003 a pound.

Oil

Crude prices rose on Friday after bottom fishers snapped up nicely priced positions in the commodity on the view futures were oversold after hefty declines, while upbeat U.S. economic indicators also supported oil.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in November traded up 0.29% at $82.94 a barrel during U.S. trading. New York-traded oil futures hit a session low of $82.47 a barrel and a high of $84.43 a barrel.

The November contract settled up 1.12% at $82.70 a barrel on Thursday.

Nymex oil futures were likely to find support at $79.78 a barrel, Thursday’s low, and resistance at $84.83 a barrel, Thursday’s high.

Oil prices have fallen in recent sessions on concerns that global supply far outstrips demand, though by Friday, investors viewed the commodity as oversold.

Upbeat U.S. consumer sentiment data supported prices as well by fueling expectations that a more robust economy will consume more fuel and energy going forward.

Separately, on the ICE Futures Exchange in London, Brent oil futures for December delivery were up 0.09% at US$85.90 a barrel, while the spread between Brent and U.S. crude contracts continued to narrow and stood at $2.96.

Natural Gas

Natural gas futures dropped on Friday after updated weather-forecasting models scaled back the intensity of a U.S. cool snap and called for mild temperatures that should curb demand for both heating and air conditioning.

On the New York Mercantile Exchange, natural gas futures for delivery in November were down 0.86% at $3.764 per million British thermal units during U.S. trading. The commodity hit a session low of $3.716, and a high of $3.817.

The November contract settled down 0.11% on Thursday to end at $3.796 per million British thermal units.

Natural gas futures were likely to find support at $3.716 per million British thermal units, the session low, and resistance at $3.955, Tuesday’s high.

Mild temperatures sent natural gas prices falling on Friday.

Natgasweather.com reported in its Friday midday update:

“Reinforcing cool surges will sweep through the Great Lakes Region and Northeast into early next week, with lows dropping into the 30s and 40s, locally below freezing to drive moderate demand for early season heating. However, the rest of the U.S. will be relatively comfortable as high pressure expands to cover many northern U.S. regions by late in the week, providing several days where only light national heating or cooling demand will be needed.”

Thursday’s supply report pressured prices lower as well.

The Energy Information Administration reported earlier that working natural gas storage in the U.S. rose by 94 billion cubic feet in the week ending Oct. 10, outpacing market calls for a build of 91 billion cubic feet, which sent prices edging lower.