Investing.com Weekly Wrap-Up 01 May 2015

U.S. stocks rebound from Thursday’s sell-off, ending week on strong note

by Investing.com Staff, Investing.com

Stocks on the U.S. equities markets snapped back on Friday, rallying from Thursday’s massive sell-off to open the start of May trading on a strong note.

The Dow Jones Industrial Average, the NASDAQ Composite index and the S&P 500 Composite index all moved broadly higher by more than 1%, following a relatively modest performance in the month of April. The Dow gained 183.54 or 1.03% to close the week at 18,024.06, while the NASDAQ rose 63.97 or 1.29% to 5,005.39, ending a four-day losing streak.

The S&P, meanwhile, gained 22.78 or 1.09% to 2,108.29, as stocks in the Basic Materials, Consumer Services and Technology sectors led. For the session, nine out of 10 sectors closed higher with only Telecommunication stocks in the red.

Social media stocks remained in focus, following disappointing earnings by Twitter Inc(NYSE:TWTR) Yelp Inc (NYSE:YELP) and LinkedIn Corporation (NYSE:LNKD) earlier in the week. LinkedIn, the professional online networking site, plunged 46.92 or 18.61% to 205.21, while Twitter dropped 1.12 or 2.87% to 37.84 on Friday. At one point in Friday’s session, all three stocks were down more than 20% on the week.

The top performer on the Dow was Apple Inc (NASDAQ:AAPL), which rebounded after posting its longest losing streak in three and a half months on Thursday as reports surfaced of defects in some components of the new iWatch. Apple gained 3.40 or 2.72% to 128.55, finishing just ahead of Intel Corporation (NASDAQ:INTC), which rose 0.87 or 2.67% to 33.42.

Shares in Intel moved higher, amid a Reuters report that it reached a standstill agreement with fellow semiconductor company Altera Corporation (NASDAQ:ALTR) that expires on Friday. Upon expiration, Intel will have the option of launching a hostile takeover bid, according to Reuters. Altera, the top performer on the NASDAQ and S&P 500, gained 4.08 or 9.79% to 45.76.

The worst performer on the Dow was Chevron Corporation (NYSE:CVX), following comparatively low quarterly profits due to crashing oil prices. Chevron, which fell 2.16 or 1.94% to 108.90, reported net income of 2.57 billion or 1.37 per share versus quarterly income in 2014 of 4.51 billion or 2.36 per share. Analysts had forecast earnings per share of 0.79.

On the NASDAQ, Altera finished just ahead of NXP Semiconductors which gained 4.87 or 5.07% to 100.99. The worst performer on the NASDAQ was VimpelCom (NASDAQ:VIP), which lost 0.21 or 3.70% to 5.46.

Shares in Tesla were flat at 226.03, one day after CEO Elon Musk unveiled the company’s Powerwall home battery at a press conference in California. Tesla’s 10 kWH battery pack will hit the markets for a cost of $3,500, excluding a nine-year service agreement that is required with some of the purchases. First Solar Inc (NASDAQ:FSLR), though, stumbled on Friday amid concerns of lower membership following the Tesla rollout. First Solar, the worst performer on the S&P 500, fell 2.33 or 3.90% to 57.34.

Forex

The U.S. dollar halted an extended slump against the euro on Friday, posting slight gains in a thinly traded session limited by market closures on a three-day weekend.

EUR/USD fell below 1.12 in U.S. afternoon trading, before settling at 1.199 – down 0.23%. Although the dollar snapped a four-session losing streak against the euro, it is still down several percentage points from its level on April 21 when it peaked at 1.0658. The pair had been in a holding pattern at levels between 1.05-1.10 since early-March before the euro’s rally over the last two weeks.

The majority of markets in Asia, including China were closed on Friday for the May Day holiday. Most markets were closed in Europe, as well with the exception of London.

Currency traders hoping for an indication on the timing of an interest rate hike by the Federal Reserve earlier in the week, received few clues from a guarded Federal Open Market Committee in an ambiguous rate statement. While a relatively dovish Fed removed all calendar references on a potential rate hike from its monetary policy, it still has not ruled out June for a lift-off date. On Friday, Federal Reserve of Cleveland president Loretta Mester said June is still “on the table” for a rate increase.

U.S. Consumer Sentiment rose slightly for April, as the University of Michigan’s Consumer Survey Index gained several points to 95.9, up from a reading of 93.0 in March. The current reading was unchanged from the preliminary reading for the month, but below analysts’ forecasts of 96.0. The survey’s sub index on current condition increased modestly to 107, up from a prior reading of 105.

Construction spending nationwide, however, dipped by 0.6% in March – below expectations of a 0.4% gain. Markit’s PMI manufacturing flash index also fell to 54.1, down from 55.7 in March. The index was pushed down by weakness in U.S. exports, which contracted for the first time since November. The Institute for Supply Management, meanwhile, said its national factory activity index was at 51.5 for April, remaining unchanged from a month earlier.

Elsewhere, negotiations regarding Greece’s sovereign debt crisis between prime minister Alexis Tsipras and a group of creditors known as the Brussels Group are scheduled to last throughout the weekend. On Wednesday, Moody’s cut Greece’s government bond rating from Caa1 to Caa2, amid concerns that the troubled nation will not strike a deal in time with its troika of creditors – the International Monetary Fund, European Central Bank and the European Commission.

Yields on 10-year Greek bonds ended the week at 10.23%, while yields on 10-year German bunds closed at 0.37%. In March, the bid/offer spread on German bunds increased to six basis points – the widest level in three years. Meanwhile, yields on U.S. 10-Year Treasuries gained 0.068 to 2.112%.

CTFC Commitment of Traders

Bearish sentiment weakened this week for the British pound, Japanese yen, and both the Canadian and Australian dollars.

Gold

Gold futures continued to plummet on Friday, extending a significant sell-off one day earlier on a thinly traded session limited by market closures on a three-day weekend.

On the Comex division of the New York Mercantile, gold for June delivery tumbled 11.00 or 0.93% to $1,171.40. Gold peaked above $1,180 to reach a session-high of $1,184.40 in U.S. morning trading before falling again on a choppy day of trading. On Thursday, gold prices plunged more than $30 an ounce amid a batch of stronger than expected U.S. economic data.

Gold ended the week on a three-day slump, falling nearly 3.75% from Tuesday’s high of 1,214.90. For the week, though, the precious metal was only down modestly by 0.06% during a volatile stretch of trading. Gold opened the week by shooting up 2.40% on Monday, after two sell-offs late last week.

Metal traders hoping for an indication on the timing of an interest rate hike by the Federal Reserve earlier in the week, received few clues from a guarded Federal Open Market Committee on Wednesday in an ambiguous rate statement. While a relatively dovish Fed removed all calendar references on a potential rate hike from its monetary policy, it still has not ruled out June for a lift-off date. On Friday, Federal Reserve of Cleveland president Loretta Mester said June is still “on the table” for a rate increase.

Gold likely gained support at 1,149, the low from Mar. 17 and met resistance at 1,186.90, the high from April 22. The precious metal, which is not attached to interest rates or dividends, struggles to compete with high yield bearing assets in periods of rising rates.

The majority of markets in Asia, including China were closed on Friday for the May Day holiday. China is the world’s largest producer and second-largest consumer of gold in the world. Most markets were closed in Europe, as well with the exception of London.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six major other currencies, ticked up 0.58 or 0.62% to 95.46, following the release of mixed economic data. The rally ended a seven-session losing streak. For the week, the index fell by 1.62%.

Gold becomes more expensive for foreign purchasers as the dollar appreciates.

Elsewhere, silver for July delivery fell 0.115 or 0.67% to 16.038 an ounce.

Copper for July delivery gained 0.039 or 1.34% to 2.925 a pound.

Oil

Crude futures ticked lower on Friday, as traders digested the surge in export levels in Iraq along with the latest U.S. rig decline.

On the New York Mercantile Exchange, WTI crude for June delivery fell 0.46 or 0.77% to 59.17 a barrel. U.S. crude futures reached a session-high of $59.88 nearing a closely-watched technical level of $60 for the first time since December, before slightly leveling off.

On the Intercontinental Exchange (ICE), brent for June delivery ticked down 0.33 or 0.49% to 66.45 a barrel. The spread between the U.S. domestic and international benchmarks of crude stood at $7.28, slightly above Thursday’s level of 7.16. For the week, the spread fell more than a dollar from 8.31 at Monday’s start of trading.

Both benchmarks surged by more than 15% for the month of April, underscoring easing concerns of oversupply as production levels declined.

Oil services firm Baker Hughes (NYSE:BHI) said on Friday in a weekly report that oil rigs nationwide fell by 24 last week to 679, the lowest total since September, 2010. It marked the 21st consecutive week of lowering rig counts in the U.S. Crude futures were relatively unchanged following the release. The pace of slowdown, however, continued to decrease. Drillers have been closing low-performing rigs at a high rate following November’s energy crash in an effort to manage their equipment more efficiently.

Elsewhere, traders continued to react to a Reuters survey published on Thursday which indicated that OPEC’s supply levels swelled to 31.04 million barrels per day in April, its highest level in two years. Export levels in Iraq jumped to a record-high of 3.08 million bpd, up from 2.98 million a month earlier.

In Saudi Arabia, oil giant Aramco named Armin Nasser interim CEO, following the appointment of Khalid Al-Falih as the chairman of the nation’s state oil firm and health ministry. Earlier in the week, Saudi Arabia’s Supreme Economic Council agreed to restructure Aramco, separating it from the government’s oil ministry. In September, the U.S. Energy Information Administration (EIA) reported that Saudi Arabia had the world’s largest crude oil reserves, accounting for approximately 16% of the total amount worldwide. In 2013, in its last public estimate, Aramco said its crude production averaged roughly 9.4 million bpd.

Natural Gas (Thursday Report)

Natural gas futures reversed losses on Thursday, hitting the highest levels of the session, after data showed that U.S. natural gas supplies rose less than expected last week.

On the New York Mercantile Exchange, natural gas for delivery in June hit a session low of $2.559 per million British thermal units, before turning higher to trade at $2.697 during U.S. morning hours, up 9.1 cents, or 3.49%. Prices were at around $2.560 prior to the release of the supply data.

A day earlier, natural gas jumped 6.9 cents, or 2.72%, to close at $2.606. Futures were likely to find support at $2.481 per million British thermal units, the low from April 27, and resistance at $2.653, the high from April 23.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended April 24 rose by 81 billion cubic feet, below expectations for an increase of 85 billion and following a build of 90 billion cubic feet in the preceding week.

Supplies rose by 77 billion cubic feet in the same week last year, while the five-year average change is an increase of 55 billion cubic feet.

Total U.S. natural gas storage stood at 1.710 trillion cubic feet as of last week. Stocks were 741 billion cubic feet higher than last year at this time and 75 billion cubic feet below the five-year average of 1.785 trillion cubic feet for this time of year.

Natural gas prices have been under pressure in recent weeks amid speculation the end of the winter heating season will bring warmer temperatures throughout the U.S. and cut into demand for the fuel.

Spring usually sees the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.