Investing.com Weekly Wrap-Up 21 August 2015

U.S. stocks lower at close of trade; Dow Jones Industrial Average down 3.13%

by Investing.com Staff, Investing.com

U.S. stocks were lower after the close on Friday, as losses in theTechnology, Oil & Gas and Consumer Services sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average fell 3.13% to hit a new 6-months low, while the S&P 500 index declined 3.19%, and the NASDAQ Composite index lost 3.10%.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 47.54% to 28.24 a new 3-years high.

The best performers of the session on the Dow Jones Industrial Average were EI du Pont de Nemours and Company (NYSE:DD), which fell 0.78% or 0.41 points to trade at 52.00 at the close. Meanwhile, 3M Company (NYSE:MMM) fell 0.88% or 1.26 points to end at 142.09 and Walt Disney Company (NYSE:DIS) was down 1.18% or 1.18 points to 98.84 in late trade.

The worst performers of the session were Apple Inc (NASDAQ:AAPL), which fell 5.86% or 6.60 points to trade at 106.05 at the close. Microsoft Corporation (NASDAQ:MSFT) declined 5.67% or 2.59 points to end at 43.07 and Nike Inc (NYSE:NKE) was down 4.84% or 5.43 points to 106.87.

The top performers on the S&P 500 were Salesforce.com Inc (NYSE:CRM) which rose 1.96% to 69.15, Teradata Corporation (NYSE:TDC) which was up 1.89% to settle at 30.19 and CONSOL Energy Inc (NYSE:CNX) which gained 0.96% to close at 12.61.

The worst performers were Intuit Inc (NASDAQ:INTU) which was down 13.26% to 89.28 in late trade, Ross Stores Inc (NASDAQ:ROST) which lost 9.50% to settle at 50.00 and Marathon Petroleum Corporation (NYSE:MPC) which was down 9.21% to 48.38 at the close.

The top performers on the NASDAQ Composite were Macrocure Ltd (NASDAQ:MCUR) which rose 51.01% to 4.50, Siliconware Precision Industries (NASDAQ:SPIL) which was up 24.13% to settle at 6.43 and Key Technology Inc (NASDAQ:KTEC) which gained 22.76% to close at 13.16.

The worst performers were Tuesday Morning Corp (NASDAQ:TUES) which was down 36.18% to 5.91 in late trade, ChinaCache International Holdings (NASDAQ:CCIH) which lost 34.31% to settle at 5.59 and Myos Corpor (NASDAQ:MYOS) which was down 29.75% to 2.22 at the close.

Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2130 to 342 and 1 ended unchanged; on the Nasdaq Stock Exchange, 1770 fell and 810 advanced, while 4 ended unchanged.

Shares in EI du Pont de Nemours and Company (NYSE:DD) fell to 52-week lows; falling 0.78% or 0.41 to 52.00. Shares in Tuesday Morning Corp (NASDAQ:TUES) fell to 52-week lows; down 36.18% or 3.35 to 5.91. Shares in ChinaCache International Holdings (NASDAQ:CCIH) fell to 52-week lows; losing 34.31% or 2.92 to 5.59. Shares in Myos Corpor (NASDAQ:MYOS) fell to 3-years lows; losing 29.75% or 0.94 to 2.22.

Additional stock news from Reuters at Investing.com.

Forex

EUR/USD soared more than 1% for the second consecutive session to move to its highest level in nearly two months, amid a massive sell-off in equity markets worldwide as concerns of a recession in China mounted.

The currency pair traded between a range of 1.1229 and 1.1389 before settling at 1.1384, up 0.0144 or 1.28% on Friday’s session. The euro closed higher against the dollar for the third straight session, moving to its highest versus its American counterpart since late-June. While the pair has remained in a holding pattern between 1.08 and 1.14 for the majority of 2015, it is by roughly 4% since the start of the summer.

EUR/USD likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1411, the high from June 22.

Stocks around the world have suffered a massive sell-off since Wednesday afternoon when the Federal Open Market Committee rattled markets with the release of relatively dovish minutes from its July meeting, which provided indications that persisting weakness in the economy could prompt it to delay an interest rate hike beyond September. The downturn has exacerbated fears of a global economic slowdown, as markets ranging from Wall Street and the U.K. to China entered correction on Friday following declines of more than 10% from recent highs. The Dow Jones Industrial Average plunged more than 500 points in Friday’s session, after suffering its worst one-day loss in four years.

The equities crash has sent investors to scurrying to government bonds, as yields continued to plunge. As a result, U.S. Treasuries are in line for one of their strongest months of the year amid soaring bond prices. On Friday, the yield on the U.S. 10-Yearfell four basis points to an intraday low of 2.03%, its lowest level since late-April. Yields on 10-year government bonds in Germany and the U.K. also moved lower during Friday’s session.

In overnight trading, reports in China indicated that manufacturing production nationwide has shrunk at its quickest pace in more than six years, illustrating the unrelenting listlessness in the nation’s factory sector. A preliminary reading of the Flash China Caixin PMI for August fell to 47.1, its lowest level since the end of the Financial Crisis. A reading below 50 provides a signal of contraction in the industry. The reading fell considerably below analysts’ forecasts of 47.7 and extended losses from July’s reading of 47.8, when it plummeted to a two-year low.

The People’s Bank of China (PBOC) has approved a wide range of stimulus initiatives throughout the year in an effort to drive an economy that is experiencing its slowest level of growth in more than a decade. Over the last several months, the Chinese government has lowered its benchmark interest rate twice, cut the Reserve Ratio Requirement (RRR) or amount banks must hold in cash reserves and relaxed rules on margin financing or stock trading with borrowed funds in attempts to spur activity. The PBOC also devalued the yuan by nearly 2% earlier this month in a move aimed at boosting slumping export levels.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, plummeted by nearly 1% to 94.84, its lowest level since late-June.

CTFC Commitment of Traders

Speculators this week were less bearish on the Japanese yen, the euro and the S&P 500.

Gold

Gold futures ticked up on Friday extending sharp gains from the prior session, as weak manufacturing data in China bolstered arguments for additional stimulus measures by the Chinese Central bank in order to jump start growth in the world’s second-largest economy.

Meanwhile, investors continue to prepare for a delayed interest rate hike by the Federal Open Market Committee after the release of dovish minutes from its July meeting earlier this week – a development that is largely viewed as bullish for gold.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,148.60 and $1,167.80 an ounce, before settling at 1,160.00, up 6.80 or 0.59% on the session. At one point on Friday, gold reached its highest level since early-July as it continues its extended rally from last month’s severe downturn. Gold futures have now closed higher over the last three trading days and nine of their previous 12 sessions, while rebounding by more than 5% in recent weeks. In July, gold suffered a 10-day losing streak, its longest in nearly two decades, and plunged to five-year lows after falling from a peak of around $1,200 an ounce a month earlier.

On Friday, reports in China indicated that manufacturing production nationwide has shrunk at the quickest pace in more than six years, illustrating the unrelenting listlessness in the nation’s factory sector. The People’s Bank of China (PBOC) has approved a wide range of stimulus initiatives throughout the year in an effort to drive an economy that is experiencing its slowest level of growth in more than a decade.

China is the world’s largest producer of gold and the second-largest consumer of the precious metal behind India.

Investors also continued to react to strong indications from the FOMC that it could delay a highly-anticipated interest rate hike beyond the fall, amid soft inflation data. While the Consumer Price Index (CPI) for July inched up 0.1%, it still fell under analysts’ forecasts of a 0.2% monthly gain. The Core CPI Index, which strips out food and energy prices, rose by 1.8% on a yearly basis, also falling below the Fed’s target by 0.2%.

The FOMC appears sharply divided on whether inflation is moving close to a level it deems appropriate to start raising short-term rates. The FOMC said by some objectives the inflation data was “not progressing” toward its targeted goal, according to the minutes. Other members, however, said that inflation conditions for a rate hike would be met or could be “met shortly.”

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

Silver for September delivery fell 0.217 or 1.40% to 15.300 an ounce.

Copper for September delivery dipped 0.017 or 0.72% to 2.302 a pound.

Oil

U.S. crude futures fell below a key technical level on Friday plunging under $40 a barrel for the first time since 2009, amid a slight build last week in oil rigs nationwide.

On the New York Mercantile Exchange, WTI crude for October delivery traded between $39.89 and $41.39 a barrel, before closing at 40.42, down 0.90 or 2.17% on the session. U.S. crude futures closed lower for an eighth consecutive week, marking the longest weekly skid in more than 29 years. Texas Long Sweet futures are now down by more than 22% over the last month of trading, as few signs appear of any reduction in the glut of oversupply in global energy markets.

On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $45.09 and $46.52 a barrel, before settling at 45.43, down 1.16 or 2.52% for the day. The spread between the international and U.S. benchmarks of crude stood at $5.01, below Thursday’s level of 5.34 at the close.

WTI crude dipped below $40 shortly after oil services firm Baker Hughes (NYSE:BHI) released its weekly U.S. rig count early in the afternoon trading session. Last week, U.S. oil rigs ticked up by two to 674 for the week ending on August 14, marking the fifth consecutive week of weekly builds. The oil rig count has steadily increased toward the latter end of the summer, after experiencing more than 25 weeks of weekly declines earlier this year. Nevertheless, the U.S. oil rig count is still substantially lower than its level last fall when it peaked above 1,600.

Beyond the symbolism attached with the latest drop in U.S. crude prices, the downturn could represent a fundamental shift in how oil is drilled throughout the country. When crude prices drop below $40, they fall outside the “shale band,” a gauge used by producers to monitor output levels. By rule of thumb, when crude drops below Friday’s level a large percentage of shale producers are forced to cut output due to lower profit margins. Alternatively, when crude prices move above $60, it provides shale producers with more flexibility to drill at higher levels.

In late-1985, the last time crude endured a weekly slump as long as its current skid, oil prices plummeted to $10 a barrel from its previous level of around $30 over a five-month period. The oil crash was provoked by a strategic decision from OPEC to increase output as a way of regaining market share. The initiative draws parallels to a controversial move from OPEC last November to maintain its production ceiling above 30 million barrels per day, reportedly in an effort to undercut U.S. shale producers.

Over the last nine months, crude prices have plunged more than 50% as surging production has disrupted the supply-demand balance in markets throughout the world. Last week, U.S. crude production fell by 47,000 barrels to 9.348 million barrels per day, around its lowest level since early-May. While output remains near its highest level in more than 40 years, it continues to wane amid declining U.S. shale production. Saudi Arabian output, meanwhile, hovers around 10.5 million barrels per day, as OPEC production remains near record-highs.

Natural Gas (Thursday Report)

Natural gas futures extended gains on Thursday, after data showed that U.S. natural gas supplies rose less than expected last week.

Natural gas for delivery in September on the New York Mercantile Exchange rallied 5.6 cents, or 2.08%, to trade at $2.772 per million British thermal units during U.S. morning hours. Prices were at around $2.728 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 August 14 rose by 53 billion cubic feet, below expectations for an increase of 58 billion.

That compared with builds of 65 billion cubic feet in the prior week, 86 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 54 billion cubic feet.

Total U.S. natural gas storage stood at 3.030 trillion cubic feet as of last week. Stocks were 488 billion cubic feet higher than last year at this time and 80 billion cubic feet above the five-year average of 2.950 trillion cubic feet for this time of year.

A day earlier, natural gas prices inched up 1.2 cents, or 0.44%, to close at $2.716 as market players weighed shifting weather forecasts to assess the outlook for U.S. demand and supply levels.

Cooler weather was expected across key consumption regions of the U.S. in the week ahead, before a shift to warmer weather pushes readings to above normal across much of Northeast and Midwest towards the end of August.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Natural gas accounts for about a quarter of U.S. electricity generation.