Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 2.55%
U.S. stocks were lower after the close on Friday, as losses in the Oil & Gas, Consumer Services and Financials sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average lost 2.55%, while the S&P 500 index lost 2.81%, and the NASDAQ Composite index fell 3.20%.
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The best performers of the session on the Dow Jones Industrial Average were Walmart Inc (NYSE:WMT), which rose 1.13% or 1.37 points to trade at 122.92 at the close. Meanwhile, Home Depot Inc (NYSE:HD) fell 0.57% or 1.26 points to end at 218.57 and Coca-Cola Company (NYSE:KO) was down 0.63% or 0.29 points to 45.60 in late trade.
The worst performers of the session were Dow Inc (NYSE:DOW), which fell 7.52% or 2.76 points to trade at 33.93 at the close. Exxon Mobil Corp (NYSE:XOM) declined 7.17% or 3.33 points to end at 43.14 and Raytheon Technologies Corp (NYSE:RTX) was down 5.71% or 3.70 points to 61.11.
The top performers on the S&P 500 were Fortune Brands Home & Security Inc (NYSE:FBHS) which rose 6.85% to 51.50, Clorox Co (NYSE:CLX) which was up 3.36% to settle at 192.71 and Aon PLC (NYSE:AON) which gained 3.21% to close at 178.21.
The worst performers were Weyerhaeuser Company (NYSE:WY) which was down 17.83% to 17.97 in late trade, Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) which lost 15.61% to settle at 13.84 and Helmerich and Payne Inc (NYSE:HP) which was down 14.97% to 16.81 at the close.
The top performers on the NASDAQ Composite were Liberty Global PLC Class B (NASDAQ:LBTYB) which rose 74.29% to 32.00, Discovery Communications B Inc (NASDAQ:DISCB) which was up 68.84% to settle at 57.95 and Gridsum Holding Inc (NASDAQ:GSUM) which gained 57.14% to close at 0.990.
The worst performers were Tuesday Morning Corp (NASDAQ:TUES) which was down 32.47% to 0.490 in late trade, Pulse Biosciences Inc (NASDAQ:PLSE) which lost 23.42% to settle at 8.60 and Centennial Resource Development Inc (NASDAQ:CDEV) which was down 23.29% to 0.91 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2463 to 439 and 37 ended unchanged; on the Nasdaq Stock Exchange, 2195 fell and 481 advanced, while 43 ended unchanged.
Shares in Liberty Global PLC Class B (NASDAQ:LBTYB) rose to 52-week highs; gaining 74.29% or 13.64 to 32.00. Shares in Discovery Communications B Inc (NASDAQ:DISCB) rose to all time highs; up 68.84% or 23.63 to 57.95.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 8.90% to 37.19.
Gold Futures for June delivery was up 0.95% or 16.05 to $1710.25 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in June rose 4.56% or 0.86 to hit $19.70 a barrel, while the July Brent oil contract rose 0.49% or 0.13 to trade at $26.61 a barrel.
EUR/USD was up 0.24% to 1.0981, while USD/JPY fell 0.25% to 106.91.
The US Dollar Index Futures was up 0.07% at 99.097.
See also:​
Australia stocks lower at close of trade; S&P/ASX 200 down 5.01%
Stocks – Dow Kicks off May on Sour Note as Trump Threatens Payback on China
Stocks – Wall Street Opens Lower as Trump Talks Tariffs; Dow Down 425
The U.S. dollar was a little lower in early European trade Thursday, with traders having to balance the potential for more central bank largesse with the vivid illustrations of the damage the coronavirus outbreak has been doing to the global economy.
At 3:05 AM ET (0705 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.523, down 0.1%, while EUR/USD rose 0.1% to 1.0884. GBP/USD climbed 0.1% to 1.2471 and USD/JPY fell 0.1% to 106.56.
The focus has turned from the Federal Reserve to the European Central Bank, as the governing council has to decide on Thursday if more than 1 trillion euros ($1.1 trillion) in asset purchases and a generous lending plan are enough to keep companies and households afloat.
Goldman Sachs (NYSE:GS) strategist Michael Cahill in a note:
“Our economists expect the ECB to announce a 500 billion euro expansion to the (bond buying) program to serve as a backstop against increased fiscal issuance needs. The path for the euro in the near-term will depend on the mix of measures introduced.”
He said targeted credit action was likely to reduce domestic risks and offer support, while a “wait-and-see” stance from the bank could weigh on the currency.
The ECB is meeting on a day that eurozone economies are following the U.S. in announcing the biggest quarterly drops in GDP in over a decade. France’s fell 5.8% while Spain’s fell 5.2% in the quarter. Figures for the euro zone as a whole are due at 5 AM ET (0900 GMT).
The Federal Reserve kept rates unchanged on Wednesday, but expressed a willingness to do more to support the economy if this was needed. Fed Chairman Jerome Powell said:
“We will continue to use our tools to ensure that the recovery, when it comes, will be as robust as possible.”
For now, he said, monetary policy is calibrated appropriately, but added that could change. Powell said:
“It may well be the case that the economy will need more support from all of us if the recovery is to be a robust one.”
And more may well be needed judging from the latest economic growth figures.
U.S. gross domestic product fell 4.8% in the first quarter, the worst economic decline since 2008, exceeding economists’ forecasts for a 4% decline in output, and the second quarter is likely to be far worse.
See also:
- EUR/USD Extends Gains as Fed Pledges to Stick With Low Rates
- Forex – Dollar Slips Back With Riskier Currencies in Demand
It was just a 24-hour retreat, but gold is back to its previous $1,700 perch after President Donald Trump threatened China with fresh tariffs by suggesting Beijing’s irresponsible handing of its coronavirus pandemic was what led to the virus’ major outbreak in the U.S.
Ed Moya, analyst at New York-based OANDA, said:
“Gold prices are rallying as economic uncertainty now must deal with a potential return of tariff threats from President Trump. The global economic recovery needs a lot to go its way for the upcoming recession to be a short one.”
Gold futures for June delivery on New York’s COMEX settled up $6.60, or 0.4%, at $1,700.90 per ounce. For the week, though, it fell nearly $35, or 2%, accounting for the return of risk appetite to Wall Street earlier in the week on signs of progress in a potential Covid-19 drug meant for intubated patients.
Spot gold, which tracks live trades in bullion, jumped $16.30, or 1.%, to $1,702.88 by 3:20 PM ET (19:20 GMT). It fell 1.7% on the week.
Trump said late on Thursday his trade deal with China, the first phase having been signed only in January, was now of secondary importance to the pandemic, which he blames Beijing for.
Moya said further:
“Gold’s bullish outlook was mainly comprised of the growing stimulus efforts from the central banks worldwide, but now it seems it could also be supported by tariff wars between the world’s two largest economies.”
But the OANDA analyst also gold’s stay at $1,700 wasn’t tethered and volatility to the downside was possible:
“Throughout past-market crashes, gold typically loses its safe-haven appeal during the panic-selling phase but resumes it once the recovery starts to take form. The U.S. economy is too vulnerable right now, so President Trump will likely not follow through on these latest tariff threats.”
Joshua Graves, senior market strategist at RJO Futures in Chicago, had a similar view, saying the most important level to watch for gold bugs to watch was the recent high of around $1,790:
“Unless this level specifically is taken out you can’t make a case for a bull run beyond that. There must be something new that develops to give the bulls a boost and a stock market selloff won’t do it. We’ve seen that before.”
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U.S. West Texas Intermediate crude futures struggled to keep a floor beneath a three-day rebound as traders and investors looked for fresh signs that production cuts, well shut-ins and rig losses were biting in a bigger way on the country’s highly-efficient oil fracking system.
Brent, the global crude benchmark, meanwhile, slid on Bloomberg data showing that OPEC’s crude production surged by the most in almost 30 years last month as its biggest members fought to dominate a global market devastated by the coronavirus crisis.
Olivier Jakob of the Zug, Switzerland-based oil risk consultancy PetroMatrix said in his daily note, reviewing April’s activity as well as the start of May trading:
“This was a month that will go in the history books, one that you will be able to tell your grandchildren (if they still care about oil by then).”
“The month started with a focus on demand destruction and ended with the focus shifting to supply destruction,” Jakob said, referring to the 8% decline in WTI in April, after the first ever negative pricing for the U.S. benchmark, and its rebound since to a 17% gain for this week.
June WTI settled up 94 cents, or 5%, at $19.78 per barrel, after hitting a two-week high of $20.45 earlier.
July Brent settled down 4 cents, or 0.2%, at $26.44.
Brent fell after a Bloomberg survey showed that OPEC’s most powerful member, Saudi Arabia, pumped a record of more than 11 million barrels a day as it waged a price war against its former ally Russia.
Though they reached a truce by mid-April, striking a deal to cut vast amounts of supply, the Saudis continued to keep production high for much of the month — even with demand suffering an unprecedented freefall, Bloomberg reported.
WTI has jumped $7, or nearly 57%, since Tuesday’s settlement, helped by a mix of happy news on progress achieved over a potential drug for acute Covid-19 patients. a lower-than-expected weekly build in crude stockpiles, unexpected weekly drawdown in gasoline stockpiles and optimism over the reopening of U.S. businesses from Covid-19 lockdowns.
Just a week ago, U.S. crude prices were struggling to stay in double-digit territory amid fears that the United States will run out of space soon to store oil from all the piled-up supply since the country went into lockdown to curb the spread of the virus. Slower crude builds since last week eased some of the storage fears, helping WTI rebound.
Still there was no sign of the magic number sought by oil bulls indicating that production was collapsing.
The Energy Information Administration estimated that at the end of last week, U.S. crude production stood at 12.1 million barrels per day, down by just 1 million bpd from a record high of 13.1 million bpd in mid-March. That’s a remarkably slow slide compared to the stories in the media of voluntary production shut-ins, rig cuts and reductions in capital expenditure announced by various oil drillers.
Industry firm Baker Hughes said on Friday that oil rigs it surveyed across the United States fell by 53 this week, bringing to 358, or 53%, the total number of oil rigs lost over the last seven weeks.
Despite their cutbacks in production now, U.S. oil drillers have also become victims of their own success in recent years, by achieving admirable drilling efficiency from fracking in their shale fields.
Dominick Chirichella, director of risk and trading at the Energy Management Institute in New York, noted in recent research:
“The U.S. upstream sector is currently deploying 438 or 72.8% fewer drilling rigs than in October of 2014, but is producing 3,425,000 bpd (38.6%) more oil.”
See also:
- Crude Oil Edges Higher, at Least For Now
- Oil Steams Along With Gains as Norway Throws Hat Into Ring With Cuts
Natural Gas (ETF Trends)
The once beaten down natural gas sector-specific exchange traded fund has surged over the past month as U.S. crude oil producers turn off supply and investors bet on higher natgas prices.
The First Trust Natural Gas ETF (NYSEArca: FCG), which tracks natural gas exploration and production companies, was the best performing non-leveraged ETF of the past month, jumping 84.8%.
The historic fall in crude oil prices, which dipped into the negative for the first time ever, on the heels of the collapse in demand in response to the coronavirus outbreak has forced many oil producers to turn off oil wells. The shutdowns not only diminishes the supply of crude oil, but it also reduces a lot of natural gas that is extracted as a byproduct.
Further bolstering the natural gas markets, coal’s share of U.S. electricity generation has steadily declined to about a third from last year, the Wall Street Journal reports.
Both factors have helped drive interest for natural gas and its producers. For example, hedge funds and other speculators last week were net long natgas for the first time since last May, according to Commodity Futures Trading Commission data.
SunTrust Robinson Humphrey analysts upgraded their outlook for shares of seven gas producers by an average of 69%. Additionally, Tudor, Pickering, Holt & Co. recommended EQT, Cabot Oil & Gas Corp. and Tourmaline Oil Corp. to capitalize on near-term gains due to 6 billion to 7 billion cubic feet of gas per day that were cut from the market following the closure of oil wells.
Mark Unferth, a portfolio manager at Alpine Capital Research, told the WSJ, referring to companies that don’t produce much poorly priced oil and natural gas liquids:
“We think the dry gas producers are attractive. We’ve been adding to our exposure the past six weeks and overall it’s about 5% of our portfolio.”
See also:
Rising Natural Gas Prices Are a Hot Bet (The Wall Street Journal)
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