Written by Investing.com Staff, Investing.com
U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.57%
U.S. stocks were higher after the close on Friday, as gains in the Technology, Basic Materials and Oil & Gas sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average gained 0.57%, while the S&P 500 index added 0.41%, and the NASDAQ Composite index added 0.70%.
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The best performers of the session on the Dow Jones Industrial Average were Intel Corporation (NASDAQ:INTC), which rose 8.10% or 4.23 points to trade at 56.46 at the close. Meanwhile, Caterpillar Inc (NYSE:CAT) added 4.39% or 5.88 points to end at 139.73 and 3M Company (NYSE:MMM) was up 2.59% or 4.20 points to 166.09 in late trade.
The worst performers of the session were Coca-Cola Company (NYSE:KO), which fell 1.57% or 0.86 points to trade at 53.75 at the close. Boeing Co (NYSE:BA) declined 1.37% or 4.72 points to end at 339.83 and Procter & Gamble Company (NYSE:PG) was down 1.23% or 1.54 points to 123.25.
The top performers on the S&P 500 were ResMed Inc (NYSE:RMD) which rose 12.94% to 144.26, Mohawk Industries Inc (NYSE:MHK) which was up 10.94% to settle at 144.13 and Intel Corporation (NASDAQ:INTC) which gained 8.10% to close at 56.46.
The worst performers were Ventas Inc (NYSE:VTR) which was down 8.93% to 66.00 in late trade, Edison International (NYSE:EIX) which lost 8.51% to settle at 66.05 and Albemarle Corp (NYSE:ALB) which was down 8.44% to 63.59 at the close.
The top performers on the NASDAQ Composite were Xunlei Ltd Adr (NASDAQ:XNET) which rose 107.76% to 4.82, Reebonz Holding Ltd (NASDAQ:RBZ) which was up 47.73% to settle at 1.95 and Lianluo Smart Ltd (NASDAQ:LLIT) which gained 45.70% to close at 0.746.
The worst performers were BeyondSpring Inc (NASDAQ:BYSI) which was down 26.77% to 12.28 in late trade, Melinta Therapeutics Inc (NASDAQ:MLNT) which lost 23.34% to settle at 3.350 and Universal Logistics Holdings Inc (NASDAQ:ULH) which was down 20.05% to 20.14 at the close.
Rising stocks outnumbered declining ones on the New York Stock Exchange by 1607 to 1215 and 125 ended unchanged; on the Nasdaq Stock Exchange, 1539 rose and 1061 declined, while 99 ended unchanged.
Shares in ResMed Inc (NYSE:RMD) rose to all time highs; up 12.94% or 16.53 to 144.26. Shares in BeyondSpring Inc (NASDAQ:BYSI) fell to all time lows; falling 26.77% or 4.49 to 12.28.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 7.73% to 12.65 a new 1-month low.
Gold Futures for December delivery was up 0.16% or 2.45 to $1507.15 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in December rose 0.76% or 0.43 to hit $56.66 a barrel, while the December Brent oil contract rose 0.50% or 0.31 to trade at $61.98 a barrel.
EUR/USD was down 0.22% to 1.1080, while USD/JPY rose 0.05% to 108.66.
The US Dollar Index Futures was up 0.20% at 97.597.
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The pound was lower on Friday as confusion over whether or not the U.K. will leave the European Union next week continued, as the EU failed to reach an agreement on a Brexit extension.
The U.K. had asked the EU for an extension. U.K. lawmakers voted in principle for a Brexit deal on Tuesday but pushed against Prime Minister Boris Johnson’s timetable for passing a Brexit deal in three days.
Johnson has pushed for a general election but has faced backlash. The EU postponing their decision on an extension could put more pressure on the PM. Labour leader Jeremy Corbyn said Friday he would agree to an election if a no-deal Brexit was off the table.
GBP/USD slumped 0.3% to 1.2815 as of 10:52 AM ET (14:52 GMT) while EUR/USD was down 0.2% to 1.1985.
Elsewhere, the U.S. dollar was higher as traders looked ahead to the Federal Reserve’s policy meeting next week. Policymakers are expected to cut the fed funds rate by another 25 basis points, according to Investing.com.
The global trend of easing monetary policy seems to be expanding, with Indonesia and Turkey both cutting interest rates on Thursday. TRY/USD remained flat at 0.1735 against the U.S. dollar.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.2% to 97.558. The safe-haven Japanese yen was flat with USD/JPY at 108.60.
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Gold hit two-week highs Friday, advancing in the $1,500 channel in further buildup to expectations of an impending Fed rate cut.
But the real story in precious metals belonged to silver, which rode the winds of a technical move to its biggest weekly gain in three months.
U.S. gold futures for December delivery settled up a modest 60 cents at $1,505.30 per ounce by 2:35 PM ET (18:35 GMT). In post-settlement trade, it was up $3.25, or 0.2%, at $1.507.95 by 2:35 PM ET (18:35 GMT).
Spot gold, which tracks live trades in bullion, was up $1.62, or 0.1%, at $1,505.38.
Gold returned to $1,500 on Thursday, two weeks after dropping off that bullish perch, amid expectations that the Fed’s Oct. 29-30 policy decision will yield in a third-straight rate cut for this year. Investing.com’s Fed Rate Monitor Tool showed a 91% chance that the U.S. central bank will approve another quarter-point easing as it did in July and September.
Gold is up around 17% on the year, emerging as one of the best performers among commodities in 2019, as investors plowed into the safe haven amid currency devaluations, recession fears, Brexit uncertainty and other tensions involving China and Iran.
U.S. silver futures for December delivery settled up 12.20 cents, or 0.7%, at $17.93 per ounce. For the week, it posted a 2% gain, and for the year 14%. TD Securities said in a note:
“Silver has been the main outperformer in recent days as under invested traders appear to pile in on both precious and industrial optimism. The break of the short-term downtrend since September and a 50-Day Moving Average also offers some short term juice for the metal.”
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After a midweek surge and a large weekly gain, oil’s advance seems to be slowing, raising questions on how well it’ll hold the upward momentum for the coming week.
West Texas Intermediate, the benchmark for New York-traded crude, and London’s Brent, the global gauge for oil, settled Friday’s trade up less than 1% each after drifting through most of the day with little meaningful change. Both benchmarks had put in a spirited performance earlier in the week on data showing strong U.S. oil consumption.
In the latest session, WTI settled up 43 cents, or 0.8%, at $56.66 a barrel, after reaching a three-week high of $56.72.
Brent ended trading for the regular U.S. session up 35 cents, or 0.6%, at $62.02, reaching a three-week high of $62.09 before the close.
For the week, WTI ended up 5.4% gain while Brent posted an advance of 4.4%.
Dan Flynn, analyst at Chicago’s Price Futures Group, said in his notes on oil that algorithmic trading models have forced fundamentals to take a back seat in oil, ignoring a “real shortage” in crude:
“The market with the entire complex is not looking into the crystal ball, like the futures markets have done in the past. he algos seem to be jumping on every headline, bogus or not, and drive traders that do not have deep pockets out of the market only to boomerang back after the damage has been done.”
Oil had seen dreary trading for more than a week until the U.S Energy Information Administration surprised the market on Wednesday, announcing a 1.7-million-barrel drop in domestic crude stockpiles last week, versus versus analysts’ expectations for a 2.2-million-barrel build.
The EIA has also reported sharp drops in stockpiles of fuel such as gasoline and distillates in recent weeks as refiners’ run rates fell to abysmally low levels amid long plant closures to meet new maritime fuel processing standards.
Another factor supporting crude prices was a Reuters report hinting at the likelihood of the forthcoming OPEC meeting in December considering deeper cuts than the 1.2 million barrels per day agreed by the cartel and its key ally Russia almost a year back.
But with a potential heightening in Brexit troubles and other worrying global data next week, oil may have more headwinds than it can contend with, some traders said. Tariq Zahir, managing member at the oil-focused Tyche Capital Advisors in New York, said:
“The bulls seem to be counting on refiners to continue staying away forever and not make new fuel products to replenish depleting stocks. I don’t think that’s going to be the case.”
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Natural Gas (ETF Daily News)
The end of the injection season in the natural gas market is now less than one month away. Last year at this time, the price of the energy commodity was preparing to blast off to the upside on a move that took it within ten cents of $5 per MMBtu. The energy commodity rose to the highest price since 2014 last November. During the week of October 22, 2018, the price of natural gas traded in a range from $3.102 to $3.25 per MMBtu. As of Thursday, October 24, the nearby natural gas futures contract traded from $2.213 to $2.322 per MMBtu, almost $1 lower than last year at this time.
Each Thursday, the Energy Information Administration releases its weekly data on inventories held in storage around the United States. The stockpiles data always has the potential to move the price of the volatile energy commodity, particularly when the data is significantly higher or lower than the market expects. The United States Natural Gas Fund (UNG) is the most liquid non-leveraged natural gas ETF product.
The market had expected an injection of 91 billion cubic feet
Coming into the data release for the week ending on October 18, the market’s consensus was for an injection of 91 bcf after last week’s 104 bcf increase in stockpiles.
As the chart shows, stocks rose by a lower than expected 87 bcf as of October 18. Inventories now stand at a total of 3.606 trillion cubic feet, which is 16.8% higher than last year at this time and 0.8% above the five-year average for this time of the year. In the previous report, inventories rose above the five-year average for the first time in 2019, which pushed the price of the energy commodity lower. On October 21, the price of nearby November NYMEX natural gas futures fell to a higher low at $2.213 per MMBtu.
The EIA report came in a touch lower, and the price edged higher
The lower than expected injection caused buying to emerge in the natural gas futures market following the release of the latest EIA data.
Source: EIA
The ten-minute chart of November futures illustrates the post-data rally that took the price to a high at $2.342. As I write this piece, the price was at the $2.325 per MMBtu level, over 10 cents above the October 21 higher low.
Since early August, the November natural gas futures contract has made a series of higher lows, which is a bullish price pattern as we are heading into the season where demand peaks each year.
Only three weeks to go until stockpiles begin to decline
If history is a guide, there are now three weeks left in the injection season. Last year, the shift in seasons led to an explosive rally that took the price of natural gas futures to $4.929 per MMBtu, the highest price since 2014.
A similar move in not in the cards this year because total inventories are at the 3.606 tcf level compared to a peak at 3.247 tcf last year at the start of the time of the year where demand caused stockpiles to decline.
Meanwhile, the great unknown as we head into the winter season is now the demand for heating, which is a function of average temperatures across the United States. Uncertainty over the weather from November through March should provide support for the price of natural gas since it is at a low level given the time of the year.
January is the peak time of the year for natural gas demand in the futures market. The NYMEX January futures contract was trading at the $2.56 level on October 24 following the release of the latest EIA data. I believe that the market has at least one rally on the horizon that should take the price to the $3 per MMBtu level or high on January futures. Seasonality in the natural gas market makes the current price a compelling level for a long position from a risk-reward perspective.
The United States Natural Gas Fund L.P. (UNG) was trading at $19.43 per share on Thursday afternoon, up $0.20 (+1.04%). Year-to-date, UNG has declined -16.68%, versus a 12.84% rise in the benchmark S&P 500 index during the same period.
UNG currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #51 of 109 ETFs in the Commodity ETFs category.
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