Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.81%
U.S. stocks were lower after the close on Friday, as losses in the Basic Materials, Technology and Healthcare sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.81%, while the S&P 500 index fell 0.71%, and the NASDAQ Composite index lost 0.79%.
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The best performers of the session on the Dow Jones Industrial Average were United Technologies Corporation (NYSE:UTX), which rose 0.14% or 0.21 points to trade at 153.35 at the close. Meanwhile, Walgreens Boots Alliance Inc (NASDAQ:WBA) unchanged 0.00% or 0.00 points to end at 59.08 and Boeing Co (NYSE:BA) was down 0.17% or 0.56 points to 332.76 in late trade.
The worst performers of the session were Dow Inc (NYSE:DOW), which fell 2.47% or 1.33 points to trade at 52.42 at the close. Cisco Systems Inc (NASDAQ:CSCO) declined 1.63% or 0.79 points to end at 47.63 and Caterpillar Inc (NYSE:CAT) was down 1.39% or 2.09 points to 148.44.
The top performers on the S&P 500 were Lamb Weston Holdings Inc (NYSE:LW) which rose 11.26% to 93.56, L Brands Inc (NYSE:LB) which was up 7.83% to settle at 18.86 and Northrop Grumman Corporation (NYSE:NOC) which gained 5.43% to close at 375.01.
The worst performers were Incyte Corporation (NASDAQ:INCY) which was down 9.39% to 77.90 in late trade, HollyFrontier Corporation (NYSE:HFC) which lost 6.25% to settle at 48.18 and Marathon Petroleum Corp (NYSE:MPC) which was down 5.94% to 58.23 at the close.
The top performers on the NASDAQ Composite were Leap Therapeutics Inc (NASDAQ:LPTX) which rose 51.93% to 1.61, Guardion Health Sciences Inc (NASDAQ:GHSI) which was up 42.80% to settle at 0.3570 and Inpixon (NASDAQ:INPX) which gained 38.30% to close at 0.4550.
The worst performers were Novan Inc (NASDAQ:NOVN) which was down 73.05% to 0.84 in late trade, Synthesis Energy Systems Inc (NASDAQ:SES) which lost 22.54% to settle at 8.8300 and Dragon Victory International Ltd (NASDAQ:LYL) which was down 16.26% to 1.11 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1535 to 1294 and 88 ended unchanged; on the Nasdaq Stock Exchange, 1711 fell and 943 advanced, while 74 ended unchanged.
Shares in Lamb Weston Holdings Inc (NYSE:LW) rose to all time highs; gaining 11.26% or 9.47 to 93.56. Shares in United Technologies Corporation (NYSE:UTX) rose to all time highs; rising 0.14% or 0.21 to 153.35.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 12.43% to 14.02.
Gold Futures for February delivery was up 1.77% or 27.05 to $1555.15 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in February rose 3.02% or 1.85 to hit $63.03 a barrel, while the March Brent oil contract rose 3.64% or 2.41 to trade at $68.66 a barrel.
EUR/USD was down 0.07% to 1.1162, while USD/JPY fell 0.42% to 108.11.
The US Dollar Index Futures was up 0.08% at 96.602.
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StockBeat: Defense Stocks Rally After U.S. Strike Against Iran
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Forex (Bloomberg)
The new year has barely begun and global markets are already under threat from a geopolitical flare-up that few saw coming, and that’s hurting risk-sensitive currencies such as Sweden’s krona.
The Scandinavian currency was set for worst week against the dollar since early November amid escalating tensions in the Middle East after a U.S. airstrike killed a top Iranian general. The krona had staged a dramatic recovery in the final quarter of 2019 — rallying about 5% — as the Riksbank exited almost half decade of negative interest rates.
With Iran’s threat of “severe retaliation” raising fears of an armed conflict in the Middle East, investors may be in for more volatility than they were ready for. That’s undermining the optimism that has been building in recent weeks for brighter economic prospects in 2020, with the U.S. and China now headed for a trade truce and the U.K. looking set to avoid an immediate chaotic exit from the European Union.
Valentin Marinov, head of G-10 currency research at Credit Agricole (PA:CAGR) SA in London, said:
“The timing of the latest escalation of the tensions between the U.S. and Iran is unfortunate. It could trigger unwarranted tightening in the global financial conditions and dash market hopes for a rebound of the global economy that is still to emerge from under the cloud of the U.S.-China trade war. Risk sentiment should remain fragile.”
The krona was down 0.7% this week at 9.4059 per dollar as of 2:10 p.m. in London, on track for the biggest five-day loss since the period ended Nov. 8. The Swedish currency reached 9.2949 on Dec. 31, its strongest level in six months. The Australian and New Zealand dollars dropped around 0.5% each this week. The yen led gains Group-of-10 peers on haven bids, with an advance of 1.2% against the dollar.
While key economic data such as services-sector figures from Europe and trade and payrolls reports from the U.S. will be in focus next week, geopolitics may continue to overshadow them.
The “geopolitical wind blows against the tide of economic data,” Societe Generale (PA:SOGN) SA strategist Kit Juckes wrote in a client note:
“In foreign-exchange markets, safe havens and oil-sensitive currencies benefit but it’s the yen which is the clear winner.”
He also recommended betting on Sweden’s currency weakening against the Norwegian krone.
See also:
- Forex – Dollar Rebounds From 5-Month Low
- Forex – U.S. Dollar Near Flat; Yuan Slips Despite PBOC Support
- EURJPY Price Is on the Bearish Trend and May Continue to Reach Demand Level of $119 (CryptoVibes)
- Euro to US Dollar Exchange Rate Tumbles from Near Quarterly Best (EERN)
- Pound Euro (GBP/EUR) Exchange Rate Slips as UK Manufacturing Sector Slides Deeper into Decline (Future Currency Forecast)
Gold prices jumped their most in a day since the end of August, hitting four-month highs that could propel the market toward the $1,600 per ounce level after a deadly U.S. airstrike against an Iranian general.
Gold futures for February delivery on New York’s COMEX settled up $24.30, or 1.6%, at $1,552.40 per ounce after the drone strike near Baghdad airport that killed Qassem Soleimani, the commander who led Iran’s Revolutionary Guards’ Quds force. Tehran has vowed to avenge Soleimani’s death, which President Donald Trump ordered.
It hit a session high of $1,556.05, a peak since Sept 6. The 1.6% jump on COMEX gold was also the most in a day since Aug. 23. The yellow metal is also less than a 1% gain away from its highest price since April 2013, putting it at a potential six-year high even before it reaches the $1,600 level.
Spot gold, which tracks live trades in bullion, was up $19.37, or 1.3%, at $1,548.22 by 3:30 PM ET (20:30 GMT), after a peak at $1,553.53 earlier.
Gold prices jumped about 2% in total over the past two sessions, resulting in similar gains on the week for bullion and futures on COMEX.
Gold typically rallies on political and economic troubles. Iran and the United States have have seen heightened tensions since Trump canceled in 2018 a global nuclear deal Tehran had signed with Washington and other global powers and reinstituted sanctions against the Islamic Republic. Trump said in a televised address on Friday:
“We took action last night to stop a war. We do not take action to start a war.”
Pantheon Macroeconomics Chief Economist Ian Shepherdson said sensitive assets such as oil and gold could rally further from the U.S. escalation of the conflict:
“Our base case here is that a full-blown war between the U.S. and Iran is unlikely, though we appreciate the old adage that nothing brings a country together more effectively than an external threat.”
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Oil prices jumped as much as 5% on Friday, reaching nearly $70 per barrel on the killing of Iran’s top general, before coming off their peaks despite weekly U.S. inventory data showing a huge drop in domestic crude stockpiles.
While the 11.5-million-barrel drop in U.S.crude inventories reported for the week ended Dec. 27 was nearly four times more than forecast, it was offset almost perfectly by the total rise in gasoline stockpiles and distillates inventories. The inclination of crude prices was to retreat, rather than continue rising, on those numbers.
West Texas Intermediate (WTI), the U.S. crude benchmark, settled up $1.87, or 3.1%, at $63.05 per barrel. Earlier in the session, WTI reached an eight-month high of $64.08.
Brent, the global oil benchmark, settled up $2.35, or 3.5%, at $68.60. It hit $69.48 earlier. The last time Brent came close to matching $70 per barrel was in the aftermath of the mid-September attack on Saudi Arabia’s oil facilities, an aggression that the United States had accused Iran of masterminding.
Brent, the global oil benchmark, rose $1.94, or 2.9%, to $68.19. It hit $69.48 earlier. The last time Brent came close to matching $70 per barrel was in the aftermath of the mid-September attack on Saudi Arabia’s oil facilities, an aggression that the United States had accused Iran of masterminding.
Friday’s rally came on the back of the U.S. airstrike near the Baghdad airport that killed Qassem Soleimani, the commander who led Iran’s Revolutionary Guards’ Quds force. Tehran has vowed to avenge his death, sparking fears of what an all-out Iran-U.S. conflict could do to the movement of crude in the world’s most prolific production hub for oil.
John Kilduff, founding partner at New York energy hedge fund Again Capital, said:
“On the surface of it, this is escalation, this is war, that should give oil the huge geopolitical premium that the bulls have been clamoring for for years now.”
“Yet until we see Iran’s response, it would be wise for the market to play this evenly as we’ve already gone up massively since last month on the flat price of oil. Any further gain would require substantive fundamentals-backing as the general expectation for this year is that oil supplies would go up from more U.S. drilling.”
Oil prices closed 2019 with their largest gains in three years. Brent rose 24% on the year while West Texas Intermediate gained 34%, largely on production cuts by OPEC kingpin Saudi Arabia and its top ally Russia.
But OPEC+’s promises to cut even more supplies this year has been tempered by expectations that U.S. crude production could rise strongly in 2020 responding to last year’s price gains.
Non-OPEC oil supply, led by U.S. shale, is forecast to grow by 2.1 million barrels a day in 2020, according to the Paris-based International Energy Agency (IEA).
Global demand for oil, meanwhile, is set to increase by 1.2 million barrels a day next year, the IEA said.
While U.S. crude production as a whole hit a record high of 12.9 million barrels per day in 2019, shale oil output – which accounts for more than half of U.S. total production – has been somewhat restrained this year. U.S. crude producers as a whole cut the number of actively operating oil rigs in the country to 677 last year from 885 at the end of 2018, a drop of 208 rigs or 24%.
In Friday’s trade, crude prices came off their highs after the U.S. Energy Information Administration (EIA) reported that crude stockpiles fell by 11.5 million barrels last week, compared with expectations from analysts for a drop of 3.3 million barrels.
But the EIA also reported that gasoline stockpiles rose by 3.2 million barrels, versus an expectation for a rise of 1.8 million barrels.
And distillates inventories jumped by a whopping 8.8 million barrels, compared with forecasts for a climb of 1.1 million, the EIA said.
Barani Krishnan, senior commodities analyst at Investing.com, said:
“The drop in crude stocks was almost perfectly offset by the commensurate rise in gasoline and distillate inventories reported by the EIA. Despite the huge headline draw number, one can argue that this is a flat inventory report.”
Any bullish aspect of the report, Krishnan pointed out, would be in U.S. crude exports, which rose by 1.06 million barrels per day last week to reach a record of 4.46 million bpd.
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Natural Gas (ETF Daily News)
- Natural gas retreats to below $2.20 per MMBtu
- A triple-digit withdrawal, but a warm holiday across the US
- Only short covering can lift the price with inventories at the current level
The Christmas holiday on Wednesday caused a one-day delay in the release of the latest natural gas inventory data from the Energy Information Administration. The was not a white Christmas in the US on December 25 as the temperatures in Chicago reached almost 60 degrees. New York and Boston were above freezing, so the demand for heating in some of the most populated cold-weather locations was below average.
On Christmas Eve, the price of nearby January natural gas futures on the NYMEX settled at $2.172 per MMBtu. While the price of the energy commodity remained above the December 9 low at $2.158, the settlement price was the lowest yet.
The United States Natural Gas Fund (UNG) is the non-leveraged ETF product that tracks the price action in the NYMEX futures market.
Natural gas retreats to below $2.20 per MMBtu
On Friday, December 27, as the nearby January futures contract was rolling to February, natural gas fell to a marginally lower low at $2.156 per MMBtu.
The daily chart shows the weak price action at the end of last week. Natural gas fell to a lower low after the release of the latest EIA data pushing price momentum and relative strength indicators into oversold territory. The total number of open long and short positions dropped from 1.3156 million contracts on December to 1.270 million on December 26 as the January futures rolled to February. The low in the now active month February contract was at $2.167, which was also a new low on December 27.
A triple-digit withdrawal, but a warm holiday across the US
I had expected an over 100 billion cubic feet decline in natural gas inventories as of December 20. Estimize, a crowdsourcing website, had projected that stockpiles would drop by around 118 bcf. Meanwhile, the withdrawal was more than expected.
(Source: EIA)
The EIA told the natural gas market that the amount in storage fell by 161 bcf. Total stocks stood at 3.250 trillion cubic feet, 19% above last year’s level, but 2.1% below the five-year average for this time of the year. Even though the withdrawal was above the level the market expected, the price moved lower in the aftermath of the data.
(Source: CQG)
The ten-minute chart shows that natural gas spiked to a high of just over $2.24 on the February contract, and then fell to under $2.19 per MMBtu. The price action was a continuation of the bearish trend in the energy commodity.
Only short covering can lift the price with inventories at the current level
With stocks 19% above the level last year at this time, the only hope for a recovery rally could be a period of short covering, which does not seem likely. The weather forecasts for Chicago, New York, and Boston for the coming week are for temperatures at or above the freezing level, which limits the upside potential for the price of natural gas. In the February futures, the island reversal trading pattern stands at $2.781 to $2.786 from early November, which has faded in the market’s rearview mirror.
For the short-term, unless we see a sudden return of colder than average temperatures, the bearish trend is likely to continue.
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