Investing.com Weekly Wrap-Up 19 June 2015

U.S. stocks pullback as Greek debt fears, Fed rate hike weigh

by Investing.com Staff, Investing.com

U.S. stocks fell broadly on Friday reversing some of the gains from the previous session, as the ongoing Greek Debt crisis and dovish remarks from Federal Reserve chair Janet Yellen earlier in the week continued to weigh.

In spite of Friday’s mild losses, stocks on the major indices still posted one of their best weeks in two months after Thursday’s Fed-inspired surge. It is becoming increasingly likely that the FOMC could wait until December before instituting its first rate hike in nearly a decade, as it looks for stronger indications of improvement in the economy and labor market during the second half of the year.

The Dow Jones Industrial Average fell 101.56 or 0.56% to 18,014.28 snapping a three-day winning streak, while the NASDAQ Composite index lost 15.95 or 0.31% to 5,117.00, slightly below record-highs achieved earlier in the week. For the week, the Dow gained more than 120 points after opening on Monday above 17,890.

The S&P 500 Composite index, meanwhile, dipped 11.48 or 0.54% to 2,109.76, as all 10 sectors closed in the red. Stocks in the Energy, Utilities and Financials sectors lagged, each closing down by at least 0.85%.

Investors also had to contend with a Quadruple Witching session, a quarterly occurrence that transpires when stock options, index options, index futures and single-stock futures all expire on the same session. All four asset classes expire on the third Friday of March, June, September and December each year, as investors must decide whether to hedge their positions or roll them over by the end of the session.

The top performer on the Dow was Home Depot Inc (NYSE:HD), which gained 0.58 or 0.52% to 112.43. The worst performer was The Travelers Companies Inc (NYSE:TRV), which lost 2.02 or 1.99% to 99.45.

The biggest gainer on the NASDAQ was American Airlines Group (MX:AAL), which gained 1.59 or 3.96% to 41.56. The worst performer was VimpelCom (NASDAQ:VIP), which fell 0.15 or 2.62% to 5.40. VimpelCom finished just below Wynn Resorts Limited (NASDAQ:WYNN), which dropped 2.15 or 2.04% to 103.11.

On the S&P 500, ConAgra Foods Inc (NYSE:CAG) finished as the top performer after gaining 4.23 or 10.80 to 43.35, after hedge fund Jana Partners disclosed a 7.2% stake in the Omaha-based packaged foods company. The worst performer was Macerich Company (NYSE:MAC), which slid 5.79 or 7.02% to 76.66 amid reports that Simon Property Group Inc (NYSE:SPG) is ready to unload its stake in the third-largest mall owner in the country.

Shares in Fogo de Chao soared 5.75 or 28.75% to 25.75, after the Brazilian steakhouse chain debuted with a $20 IPO on Friday.

On the New York Stock Exchange, decliners outnumbered advancers by a 1,849 to 1,292 margin.

Additional stock news from Reuters at Investing.com.

Forex

The euro fell mildly against the dollar on Friday, as the two sides in longstanding Greek Debt negotiations began preparation for Monday’s emergency summit of leaders from the European Union.

EUR/USD ticked down 0.0010 or 0.09% to 1.1353, snapping a two-session winning streak. The currency pair still ended the week up by more than 1% after surging to a monthly high of 1.1438 one session earlier.

EUR/USD likely gained support at 1.1188 the low from June 15 and was met with resistance at 1.1450, the high from May 18.

One day after high-level talks in Luxembourg broke-off without a deal in the five-month long Greek debt negotiations, the European Central Bank reportedly increased the cap on its Emergency Liquidity Assistance fund for banks in Greece by €3.3 billion. It came days after depositors took out a reported €2.0 billion from Greek banks in a 72-hour period, underscoring their lack of trust in the teetering economy.

Greece is running out of time before it owes the International Monetary Fund a bundled loan payment of EUR 1.5 billion on June 30. At the same time, the remaining €7.2 billion of a €240 billion stimulus package from its international creditors is set to expire at the month.

On Monday, all 27 members of the European Union are scheduled to be present at an emergency summit in what could be Greece’s final opportunity to avoid a default. During an appearance in St. Petersburg, Greece prime minister Alexis Tsipras indicated that he will be “working for success” at Monday’s summit, while adding that “those who invest in crisis and terror scenarios will be proven wrong.”

Meanwhile, a spokesperson for Germany chancellor Angela Merkel said it isn’t too late for Greece to complete a deal as long as it agrees to the reforms required.

Elsewhere, Federal Reserve Bank of San Francisco president John Williams reiterated on Friday that an interest rate hike could be appropriate in 2015, while adding that waiting too long for lift-off poses added risk. The remarks were the first public comments by a Fed governor since the Federal Open Market Committee opted not to issue any definitive wording on the timing of a rate hike on Wednesday.

Although yields on German 10-Year bunds fell six basis points to 0.75%, the yields are still up 16 basis points on the month. Yields on U.S. 10-Year Treasuries dropped eight basis points to 2.26%, as the spread between U.S. and German bonds continued to widen.

The U.S. Dollar Index, which measures the strength of the dollar versus a basket of six other major currencies, reached a session-high of 94.70 in U.S. morning trading before falling slightly back to 94.32, up 0.07%.

CTFC Commitment of Traders

No report this week.

Gold

One day after surging more than $25 an ounce, gold futures were relatively flat on Friday amid a stronger dollar and ongoing concerns of a Greek default on its sovereign debt.

On the Comex division of the New York Mercantile Exchange, gold for August delivery lost 0.10 or 0.01% to $1,201.90 a troy ounce.

Gold futures traded in a tight range of 1,198.10 and 1,203.90, ending the week up more than 1.7%. Gold finished with its best five-day period since the week ending on May 15 when it surged more than 3%. The precious metal then fell by more than 1.2% for three consecutive weeks before rallying to close last week up 0.95%.

Gold likely gained support at 1,184.00, the low from June 1 and was met with resistance at 1,208.90, the high from May 25.

The Greek crisis has been putting a support pillar under the price of gold

Gold is considered a safe haven for investors in periods of severe economic instability. It could also be an alternative for European investors concerned with the value of equities and government bonds if Greece leaves the euro zone.

The U.S. Dollar Index, which measures the strength of the dollar versus a basket of six other major currencies, reached a session-high of 94.70 in U.S. morning trading before falling slightly back to 94.39, up 0.20%. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for July delivery fell 0.055 or 0.34% to 16.098 an ounce.

Copper for July delivery plunged 0.040 or 1.52% to 2.566.

Oil

Crude plummeted on Friday as WTI futures closed below $60 for the first time in nine sessions, amid a dwindling U.S. rig count and bearish strategic positioning from Saudi Arabia’s energy minister.

On the New York Mercantile Exchange, WTI crude for August delivery plunged 0.88 or 1.44% to 59.95 a barrel. Texas Long Sweet futures traded in a tight range between 59.25 and a peak of 60.90. For the week, WTI crude declined more than 0.75% falling back slightly after surging 1.50% in the week ending June 12.

On the Intercontinental Exchange (ICE), brent crude for August delivery fell 1.23 or 1.91% to 63.03 a barrel. Brent crude also fell for the week, plunging more than 2.5% from its level at Monday’s open. The spread between the international and U.S. domestic benchmarks of crude stood at $3.08, slightly below its level of $3.25 on Friday morning.

In U.S. afternoon trading, crude prices extended earlier losses after oil services firmBaker Hughes (NYSE:BHI) said the U.S. oil rig count fell by four last week to 631, marking the 28th consecutive week of weekly declines. U.S. oil rigs are now at their lowest level since August, 2010. The pace of decline, though, continues to slow as last week’s draw represented the smallest reduction since December.

Industry observers have placed less emphasis on U.S. rig counts in comparison with recent years, as U.S. shale producers continue to remove inefficient rigs while maintaining output. A controversial decision by Opec in November to keep its supply ceiling above 30 million barrels per day triggered an arms race of sorts with the U.S. for global market share.

On Thursday, Saudi Arabia oil minister Ali Al-Naimi said in St. Petersburg that his country has roughly 1.5 million-2 million barrels of daily reserves and is ready to increase production if demand rises.

While U.S. crude production has touched record levels throughout 2015, the Energy Information Administration expects it to level off in the second half of the year. In its Short-Term Energy Outlook released last month, the EIA projects U.S. output to average 9.4 million barrels per day in 2015, before declining to 9.3 million bpd for 2016. A spike in crude prices is beneficial for shale producers due to its high marginal costs.

Natural Gas (Thursday Report)

Natural gas futures extended losses on Thursday, despite data showing that U.S. natural gas supplies rose less than expected last week.

On the New York Mercantile Exchange, natural gas for delivery in July shed 2.8 cents, or 1.0%, to trade at $2.827 per million British thermal units during U.S. morning hours. Prices were at around $2.842 prior to the release of the supply data.

A day earlier, natural gas prices rose to $2.955, the most since May 22, before turning lower to close at $2.855, down 3.9 cents, or 1.35%.

Futures were likely to find support at $2.764 per million British thermal units, the low from June 15, and resistance at $2.955, the high from June 17.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended June 12 rose by 89 billion cubic feet, compared to expectations for an increase of 93 billion and following a build of 111 billion cubic feet in the preceding week.

Supplies rose by 112 billion cubic feet in the same week last year, while the five-year average change is an increase of 87 billion cubic feet.

Total U.S. natural gas storage stood at 2.433 trillion cubic feet as of last week. Stocks were 730 billion cubic feet higher than last year at this time and 46 billion cubic feet above the five-year average of 2.387 trillion cubic feet for this time of year.

Meanwhile, updated weather forecasting models pointed to warmer-than-average temperatures in the eastern third of the U.S. through June 24, boosting near-term demand expectations for the heating fuel.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.