Investing.com Weekly Wrap-Up 31 July 2015

U.S. major indices move lower on Friday, but close up for the month

by Investing.com Staff, Investing.com

The Dow lost 55.52 or 0.31% to close at 17,690.46, while the NASDAQ inched down 0.51 or 0.01% to 5,128.28. The Dow closed the month up by less than 0.5%.

The S&P 500 dropped 4.71 or 0.22% to 2,103.92, as energy stocks plunged by more than 2.5% on the session. Stocks in the Technology, Financials and Basic Materials industries also lagged as six of 10 sectors closed in the red. For the month, the index gained more than 1.78%.

Despite minor losses overall on the final day of trading in July, all three major indices closed higher for the month – one that saw the NASDAQ Composite index soar to record intraday and all-time highs. On Friday, the Dow Jones Industrial and the S&P 500 Composite index each posted minor losses, as energy stocks weighed. Crude prices plummeted by approximately 20% on the month amid a continuing glut of oversupply, while disappointing earnings by Chevron Corporation (NYSE:CVX) and Exxon MobilCorporation (NYSE:XOM) applied downward pressure on the Dow.

The top performer on the Dow was Coca-Cola Company (NYSE:KO), which gained 0.55 or 1.34% to 41.11, as its namesake bottler in Western Europe engaged in talks to merge with German and Iberian bottling companies. Coca-Cola Enterprises Inc (NYSE:CCE), which operates the company’s bottling division, soared more than 12% to 51.04. Chevron ended the session as the worst performer, falling 4.76 or 5.12% to 88.48.

The biggest gainer on the NASDAQ was Liberty Ventures (NASDAQ:LVNTA), which rose 1.4 or 3.48% to 41.50, after receiving a buy rating from analysts at Brean Capital. It also came after the Colorado-based media conglomerate disclosed insider trading activities to the Securities and Exchange Commission in a Form 4 filing earlier this month. The worst performer was Micron Technology Inc (NASDAQ:MU), which fell more than 6.8% to 18.53.

The top performer on the S&P 500 was Expedia Inc (NASDAQ:EXPE), which surged 13.42 or 12.47% to 121.03. On Thursday, the online travel company increased its dividend after reporting quarterly net profits above analysts’ expectations.

Hanesbrands Inc (NYSE:HBI) finished the session as the worst performer, amid mixed quarterly earnings and revenues on Friday. It capped a frustrating week for the Winston Salem, North Carolina-based clothing company, which was victimized by a hacking attack on one of its online databases earlier in the week. Shares in Hanes fell 9.37% to 30.94.

On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,971 to 1,167 margin.

Additional stock news from Reuters at Investing.com.

Forex

EUR/USD rose considerably on Friday, amid staggering data which indicated that U.S. wage growth for the second quarter increased by the lowest level in more than 30 years.

The currency pair traded in a broad range between 1.0921 and 1.1113 during Friday’s session, before settling at 1.0985, up 0.0051 or 0.47%. For July, EUR/USD fell by 1.35% after wavering between 1.08 and 1.12 in a see-saw month of trading as the Greek bailout and the dramatic fall of the Chinese equities markets provided significant downward pressure.

EUR/USD likely gained support at 1.0810, the low from July 21 and was met with resistance at 1.1198, the high from July 13.

The U.S. Department of Labor said on Friday morning that its Employment Cost Index rose 0.2% for the second quarter, the lowest in the 33-year history of the report. On a year-over-year basis the index plunged 0.6% to 2.0%, posting one of its lowest readings ever. Within the report, wages and salaries fell considerably by 0.5% from the first quarter to 0.2%. The metric, which is closely watched by the Fed, will likely appease dovish arguments for a delayed interest rate hike.

The poor data pushed yields on U.S. 10-Year Treasuries down more than eight basis points to 2.184, their lowest level in more than three weeks. For the week, yields on the 10-year experienced their worst five-day period since April, as plunging commodity values continued to weigh.

On Wednesday, the Federal Open Market Committee (FOMC) concluded its two-day July meeting without offering any indications on whether it will adjust its benchmark Federal Funds Rate later this fall. U.S. short-term interest rates have remained level between zero and 0.25% for nearly six years since the end of the Financial Crisis. Nearly a decade has passed since the Federal Reserve last instituted a rate hike.

In Athens, an initial round of negotiations between Greece and its international creditors from the European Central Bank, European Commission and International Monetary Fund on a new bailout were characterized as generally positive. One day earlier, IMF officials declared that they would not participate in a three-year,€86 billion Greek bailout unless the program included significant debt relief and economic reforms.

After remaining closed for a period of several weeks, the Athens Stock Exchange is set to reopen on Monday.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, lost nearly 0.40% on Friday’s session to close at 97.32. Despite the slight losses, the index closed the month up more than 1.7%.

CTFC Commitment of Traders

Speculators this week were les bearish on EUR and GBP and more bearish on CAD and AUD.

Gold

Gold posted a rare winning session on Friday to end a mild, four-day losing skid, amid a broadly lower dollar pushed down by a wave of disappointing economic data.

The precious metal still closed July with one of its worst memories since the turn of the century, as downward pressure from a dramatic fall in Chinese stocks, mounting speculation of an interest rate hike from the Federal Reserve and the potential resolution of the Greek Debt crisis and Iranian Nuclear Deal sent prices spiraling. A push to remain above $1,200, gold’s level in mid-June, appears far in the rear view mirror.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,079.30 and $1,102.70 before settling at $1,094.20, up 5.40 or 0.50% for the day. At one point this month, gold closed lower on every session during a 10-day stretch in mid-July — experiencing its worst losing streak in nearly two decades.

In a somewhat shocking development, the U.S. Department of Labor said on Friday morning that its Employment Cost Index rose 0.2% for the second quarter, the lowest in the 33-year history of the report. On a year-over-year basis the index plunged 0.6% to 2.0%, posting one of its lowest readings ever. Within the report, wages and salaries fell considerably by 0.5% from the first quarter to 0.2%. The metric, which is closely watched by the Fed, will likely appease dovish viewpoints for a delayed interest rate hike.

Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in raising rate environments.

Elsewhere, the University of Michigan said its Consumer Sentiment Index fell below its mid-month reading of 93.3 to end July at 93.1. The reading also fell below low end of consensus forecasts between 93.5 and 97.1. The subpar reading echoed a similarly soft report from The Conference Board on consumer confidence earlier in the week.

The U.S. Dollar Index, which measures the strength of the greenback, versus a basket of six other major currencies, fell to an intraday low of 96.38 before paring some of the losses in afternoon trading. With several hours left in Friday’s session, the Index had gained about 1.6% on the month.

Silver for September delivery rose 0.049 or 0.33% to 14.745 an ounce.

Copper for September deliver fell 0.014 or 0.60% to 2.363 a pound.

Oil

Crude futures continued their steady decline on Friday in spite of a weaker dollar, as surging production among Opec members in July pushed supply at the world’s largest oil cartel to its highest level in seven years.

OPEC supply surged to 32.01 million barrels per day on the month, according to a Reuters survey, rising slightly from an upwardly revised total of 31.87 million bpd in June. Since roiling global energy markets in November with a strategic decision to boost its market share by leaving its production ceiling above 30 million bpd, OPEC supply has increased by more than 1.6 million bpd.

The latest supply build triggered a sell-off on both sides of the Atlantic, as both West Texas Intermediate and North Sea brent crude futures dipped by more than 2%. On the New York Mercantile Exchange, WTI crude for September delivery traded between $46.92 and $48.61, before closing at $47.13, down 1.39 or 2.85% on the session. For July, U.S. crude futures plunged more than 22% erasing all of their gains from the previous four months.

On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between a range of $51.97 and $53.47 a barrel, before settling at $52.24, down 1.07 or 2.01% for the day. Brent futures also fell precipitously in July, plunging by nearly 20% on the month.

The spread between the international and U.S. benchmarks of crude stood at $5.11, above Thursday’s level of $4.79 at the close.

Elsewhere, oil services firm Baker Hughes (NYSE:BHI) said in its weekly rig count on Friday that U.S. oil rigs last week increased by five to 664, its highest level since May. It came one week after an unexpected build by 21 rigs to 659. Earlier in the month, a draw that last for more than 25 consecutive weeks came to a halt following two straight weeks of builds. Last fall, the rig count peaked above 1,500.

The release of the July Reuters survey came days after a report surfaced from the Wall Street Journal that Saudi Arabia could slash crude output by 200,000 to 300,000 barrels a day, to roughly 10.3 million bpd as early as September. In June, the kingdom produced more than 10.6 million barrels a day, amounting to its highest level on record. The survey is based on shipping data and other energy statistics compiled by industry sources.

The U.S. Dollar Index, which measures the strength of the greenback, versus a basket of six other major currencies, fell to an intraday low of 96.38 before paring some of the losses in afternoon trading. Despite the losses, the index is still up more than 1.5% on the month.

Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.

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.

Natural gas for delivery in September on the New York Mercantile Exchange tumbled 5.4 cents, or 1.9%, to trade at $2.809 per million British thermal units during U.S. morning hours after hitting a daily peak of $2.882 earlier, the most since July 23. Prices were at around $2.821 prior to the release of the supply data.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended July 24 rose by 52 billion cubic feet, below expectations for an increase of 54 billion and following a build of 61 billion cubic feet in the preceding week.

Supplies rose by 88 billion cubic feet in the same week last year, while the five-year average change is an increase of 48 billion cubic feet.

Total U.S. natural gas storage stood at 2.880 trillion cubic feet as of last week. Stocks were 586 billion cubic feet higher than last year at this time and 85 billion cubic feet above the five-year average of 2.795 trillion cubic feet for this time of year.

A day earlier, natural gas rallied 4.8 cents, or 1.7%, to end at $2.864 as investors bet a heat wave making its way across the eastern U.S. will prompt households to ramp up their air conditioning.

Updated weather forecasting models called for hotter than normal temperatures across most parts of the Midwest and East Coast over the next five days.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning. Natural gas accounts for about a quarter of U.S. electricity generation.