Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 1.77%
U.S. stocks were lower after the close on Friday, as losses in the Basic Materials, Oil & Gas and Technology sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average lost 1.77%, while the S&P 500 index lost 1.90%, and the NASDAQ Composite index fell 2.50%.
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The best performers of the session on the Dow Jones Industrial Average were Verizon Communications Inc (NYSE:VZ), which rose 2.52% or 1.47 points to trade at 59.76 at the close. Meanwhile, Coca-Cola Company (NYSE:KO) added 0.92% or 0.42 points to end at 45.93 and The Travelers Companies Inc (NYSE:TRV) was up 0.39% or 0.53 points to 134.90 in late trade.
The worst performers of the session were Nike Inc (NYSE:NKE), which fell 6.61% or 5.82 points to trade at 82.19 at the close. DowDuPont Inc (NYSE:DWDP) declined 3.58% or 2.00 points to end at 53.92 and Caterpillar Inc (NYSE:CAT) was down 3.20% or 4.29 points to 129.77.
The top performers on the S&P 500 were Tiffany & Co (NYSE:TIF) which rose 3.15% to 103.21, Verizon Communications Inc (NYSE:VZ) which was up 2.52% to settle at 59.76 and ConAgra Foods Inc (NYSE:CAG) which gained 2.44% to close at 26.45.
The worst performers were Brighthouse Financial Inc (NASDAQ:BHF) which was down 6.84% to 35.54 in late trade, United Rentals Inc (NYSE:URI) which lost 6.80% to settle at 110.96 and Nike Inc (NYSE:NKE) which was down 6.61% to 82.19 at the close.
The top performers on the NASDAQ Composite were Sunesis Pharmaceuticals Inc (NASDAQ:SNSS) which rose 30.21% to 1.2500, DarioHealth Corp (NASDAQ:DRIO) which was up 25.52% to settle at 0.816 and Hibbett Sports Inc (NASDAQ:HIBB) which gained 20.29% to close at 21.70.
The worst performers were Conatus Pharmaceuticals Inc (NASDAQ:CNAT) which was down 56.01% to 1.280 in late trade, Dragon Victory International Ltd (NASDAQ:LYL) which lost 23.32% to settle at 1.48 and Lexicon Pharmaceuticals Inc (NASDAQ:LXRX) which was down 21.91% to 6.200 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2438 to 592 and 68 ended unchanged; on the Nasdaq Stock Exchange, 2243 fell and 419 advanced, while 57 ended unchanged.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 20.91% to 16.48.
Gold Futures for April delivery was up 0.46% or 5.95 to $1313.25 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in May fell 1.92% or 1.15 to hit $58.83 a barrel, while the May Brent oil contract fell 1.43% or 0.97 to trade at $66.89 a barrel.
EUR/USD was down 0.66% to 1.1299, while USD/JPY fell 0.76% to 109.95.
The US Dollar Index Futures was up 0.14% at 96.118.
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Canada stocks lower at close of trade; S&P/TSX Composite down 0.94%
U.K. stocks lower at close of trade; Investing.com United Kingdom 100 down 2.09%
Wall Street Week Ahead: Doubts increase that first quarter will be earnings low point (Reuters)
The U.S dollar edged higher against its rivals Friday following a rebound in U.S. home sales, but gains were limited by a sharp rise in the yen as U.S. government bond yields slumped amid fears of slowing growth.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.17% to 96.15.
The National Association of Realtors report showed existing home sales rose 11.8% in February from a 1.4% decline in the prior month to a seasonally adjusted annual rate of 5.51 million units. Economists were expecting a 2.2% increase to 5.10 million homes.
The rebound in home sales was partly supported by the slump in mortgage rates thanks to the Fed’s ongoing pause on monetary policy tightening, analysts said. BMO said:
“After three-consecutive monthly declines, this rebound in home sales certainly provides some relief on the outlook. [The drop in borrowing costs has helped (down over 50 bps from the highs late last year) and are] “unlikely to be heading much higher anytime soon, as the Fed has seemingly promised this week.”
The weekly Freddie Mac survey on mortgage rates, released Thursday, showed a 4.28% rate on a 30-year fixed-rate loan, down from 4.31% a week ago and 4.94% in mid-November.
But others argue lower borrowing costs are not enough to turn the tide for the embattled U.S. housing market. Capital Economics said:
“Concerns over the health of the economy will act to offset the positive impact of lower interest rates, and coupled with tight inventory levels that suggests existing sales will see minimal growth over 2019.”
The dollar’s march higher was held back by a fall in U.S. government bond yields as fears of economic slowdown intensified, propping up demand for the safe-haven yen.
USD/JPY fell 0.83% to 109.89.
Sterling, meanwhile, pared its losses from a day earlier against the greenback as the EU granted the U.K. a two-week extension.
GBP/USD rose 0.66% to $1.3194.
The extension was granted to allow the U.K. to consider whether it would opt for a longer delay and take part in European elections in May.
EUR/USD fell 0.78% to $1.1285 as German manufacturing PMI fell short of expectations, adding to concerns the euro zone economy remains stuck in a rut.
USD/CAD rose 0.42% to C$1.3415 as fears of slowing economic growth sent oil prices sharply lower, pressuring the loonie.
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The twin nightmare of a slowing Europe on top of China is helping gold bugs advance in their mission north of $1,300, even as the rival dollar recovers from some of this week’s beating.
Data showing a contraction in euro zone manufacturing growth, led by Germany, enabled both bullion and gold futures to edge higher on Friday. Gold buyers hedging against the protracted U.S.-China trade war also underpinned the yellow metal’s strength.
Spot gold, reflective of trades in physical bullion, was up $3.55, or 0.3%, at $1,312.93 per ounce at 3:20 PM ET (19:20 GMT), after scaling $1,315.02 earlier.
Gold futures for April delivery, traded on the Comex division of the New York Mercantile Exchange, settled the official trading session up $5, or 0.4%, at $1,312.30 per ounce. It got to as high as $1,314.70 earlier.
Both bullion and gold futures have returned to the critical $1,300 level since March 12 after making a 2019 high just shy of $1,350 on Feb. 20. Analysts said fears of a combined Chinese-Europe slowdown could drive more investors toward the safe haven. Kim Forrest, chief investment officer at Bokeh Capital Partners, said:
“China has been slowing down, especially in ordering industrial products and automobiles, and that is going to hit Germany out-proportionally.”
The IHS Markit preliminary Purchasing Managers’ Index, led by Germany, plunged to 44.7 in March, its lowest level since 2012 and well below economists’ expectation of 48, data showed on Friday. It was the index’s third-consecutive reading below 50 and came as new orders and employment declined. Philip Streible, senior market strategist for precious metals at RJO Futures in Chicago, said:
“Gold has got a pretty good setup here, as it managed to progress in the $1,300 channel despite the uptick in the dollar. There are a lot of economic concerns, not just with China and Europe but also over how the Fed handled its last policy meeting, and that’s bringing more hedgers into gold. If we keep to this sentiment, getting to $1,325 should be the next aim before the bigger target of $1,350.”
The Federal Reserve opted not to raise interest rates at its monthly meeting this week, with Chairman Jerome Powell maintaining his stance of being patient with tightening in order not to weaken the economy. But some also say the Fed chief appears to be veering toward a situation where he might even approve of rate easing in the future to boost the economy. That would make gold a solid buy if that were to happen.
The dollar, which investors had been using as hedge against the U.S.-China trade war, rose as President Donald Trump appeared to be downplaying the urgency for a trade deal, Bloomberg reported, saying the president wanted a deal that could be enforced .
The dollar index, which measures the greenback against a basket of six currencies, was up 0.1% at 96.12.
Palladium remained the world’s most expensive traded metal despite a drop in Friday’s trade.
The spot price of palladium fell by 45.65, or 2.9%, to 1,555.30 per ounce. It hit record high of $1,616.30 on Thursday.
Trades in other Comex metals as of 3:20 PM ET (19:20 GMT):
Palladium futures down $37.60, or 2.4%, at $1,520.30 per ounce.
Platinum futures down $11.15, or 1.3%, at $849.95 per ounce.
Silver futures down 2 cents, or 0.1%, at $15.42 per ounce.
Copper futures down 5 cents, or 1.8%, at $2.85 per pound.
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Economic numbers and technical charts don’t lie, much to the chagrin of oil bulls.
U.S. West Texas Intermediate and U.K. Brent prices retreated with considerable force on Friday from the rally earlier in the week following a contraction in eurozone manufacturing growth, led by Germany, and an unsightly picture building on the crude futures complex, where the spread between the front and back was blowing out to levels that appeared unsustainable.
WTI settled down 94 cents, or 1.6%, at $59.04.
Brent, the global oil benchmark, slid by 95 cents, or 1.4%, to $66.91 by 3:38 PM ET (19:38 GMT).
Even data showing an 11-month low in the U.S. oil rig count — which indicates future production — couldn’t help WTI and Brent pull back from the day’s losses. Oil rigs fell by nine this week, their fifth-straight week of declines, to 824, the lowest since April 2018. U.S. oil drilling has continued to slide lately, despite crude prices rising by a third this year.
The selloff was also remarkable coming so soon after WTI’s rise to four-month highs above $60 this week after data from the U.S. Energy Information Administration showed a surprisingly huge drop in U.S. crude inventories.
Notwithstanding Friday’s price drop, WTI was up 0.4% on the week, and showed a rise of nearly 3% so far for March. Year-to-date, the U.S crude benchmark has a 30% gain while its U.K. peer is up 24%, bolstered by OPEC production cut plans that could at least until June.
Hedge funds and other speculators long on oil are counting on OPEC to step in and announce deeper output cuts should the drop in crude prices ever get worrying. The cartel has tacitly assured the market that it will stay ahead of any faltering demand by ensuring it always supplied a little less than what consumers need.
Even so, the double whammy of a Chinese slowdown and its drag on Europe may be too much to discount, considering that they cumulatively account for more than half of the world’s oil demand, analysts said.
The IHS Markit preliminary Purchasing Managers’ Index, led by Germany, plunged to 44.7 in March, its lowest level since 2012 and well below economists’ expectation of 48, data showed on Friday. It was the index’s third-consecutive reading below 50 and came as new orders and employment declined.
On the U.S.-China front, President Donald Trump was downplaying the urgency for a trade agreement ahead of key meetings with Beijing, Bloomberg reported, adding that the president seemed to want an agreement that could be enforced instead of a quick deal. Kim Forrest, chief investment officer at Bokeh Capital Partners, said:
“China has been slowing down, especially in ordering industrial products and automobiles, and that is going to hit Germany out-proportionally.”
Phil Flynn, senior analyst at The Price Futures Group brokerage in Chicago and one of the oil market’s most ardent bulls, agreed that the nexus between the Chinese and Europe slowdown could not be understated:
“We may have some reason to worry.”
Some oil market participants were more worried about the technical picture of the oil futures complex. Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C., said:
“We are still looking bearish on the back end of crude, and staying away from the front end of the market is making even more sense to me.”
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Natural Gas (Hellenic Shipping News)
U.S. natural gas plant liquid production continues to hit record highs. Since 2012, when horizontal drilling and hydraulic fracturing techniques became more common, U.S. production of natural gas plant liquids (NGPL) has significantly increased, averaging 4.3 million barrels per day (b/d) in 2018, up from 2.5 million b/d in 2012. Nearly three-quarters of U.S. NGPL production is concentrated within six producing regions.
The Permian, Eagle Ford, and Appalachian regions made up more than half of all U.S. NGPL production in 2017. An additional one-quarter of NGPL production was located in three other regions – the Anadarko Basin in western Oklahoma and Texas; the Bakken play in North Dakota and eastern Montana; and the Green River, Piceance, Uinta, and Paradox Basins in the Western Rockies region of Utah, Wyoming, and Colorado.
Source: U.S. Energy Information Administration, Petroleum Supply Monthly
NGPL production has generally increased across all regions since 2012 as production of natural gas has grown. The largest increase has been in the Northern Appalachian region, where production increased from 43 thousand b/d in 2012 to 512 thousand b/d in 2017. NGPL production has doubled in both the Permian Basin in western Texas and southeastern New Mexico and the Eagle Ford play in southern Texas from 2012 to 2017. NGPL production in the Bakken play more than tripled.
Source: U.S. Energy Information Administration, Annual Report of the Origin of Natural Gas Liquids Production and Annual Report of Domestic Oil and Gas Reserves
Natural gas requires processing before entering interstate natural gas pipelines. The raw, or wet, natural gas includes methane – the primary component of delivered natural gas – as well as NGPLs such as ethane, propane, normal butane, isobutane, and natural gasoline. Once impurities such as water, hydrogen sulfide, and carbon dioxide are removed from the wet natural gas, the mixed NGPLs are transported for further processing at fractionation plants that separate the NGPLs into distinct commodities.
In most production regions, NGPLs must be shipped by pipeline to fractionation centers, such as Mont Belvieu, Texas, and Conway, Kansas, both of which act as storage, distribution, and pricing hubs for NGPLs. Northern Appalachia is one of the few areas that fractionate NGPLs in the same region where they are produced. In December 2018, the U.S. Department of Energy published a report highlighting the development potential for a new ethane hub in the Appalachian region.
NGPLs typically sell at higher values than methane on a heat-content basis because they are priced against crude oil-derived fuels. The yield of these liquid products can vary depending on the constitution of the raw natural gas, the technology used to extract NGPLs at processing plants, and the NGPL market prices and demand, especially for ethane. The domestic and international markets for individual NGPL products have grown with the growing U.S. NGPL production, as these liquids are used for feedstock in manufacturing plastics and resins.
Source: U.S. Energy Information Administration, Annual Report of the Origin of Natural Gas Liquids Production and Annual Report of Domestic Oil and Gas Reserves
In 2017, the U.S. volume-weighted average yield of NGPLs from raw natural gas was 84 barrels per million cubic feet (b/MMcf) of processed natural gas. The Bakken generates the highest NGPL yield, or richest natural gas, with an average of 143 b/MMcf. Raw natural gas from the Permian and Eagle Ford yields 95 b/MMcf and 107 b/MMcf, respectively. At 31 b/MMcf, the Western Rockies raw natural gas has the lowest NGPL yield. Producers will generally prioritize production from richer formations to maximize NGPL yields unless they lack the infrastructure to process wet gas and transport the liquids to market.
Source: EIA
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