Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.56%
U.S. stocks were lower after the close on Friday, as losses in the Technology, Consumer Services and Healthcare sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average fell 0.56%, while the S&P 500 index fell 0.81%, and the NASDAQ Composite index lost 1.27%.
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The best performers of the session on the Dow Jones Industrial Average were JPMorgan Chase & Co (NYSE:JPM), which rose 2.16% or 2.19 points to trade at 103.52 at the close. Meanwhile, Goldman Sachs Group Inc (NYSE:GS) added 1.63% or 3.38 points to end at 210.94 and Boeing Co (NYSE:BA) was up 1.35% or 2.28 points to 171.05 in late trade.
The worst performers of the session were Salesforce.com Inc (NYSE:CRM), which fell 3.89% or 10.31 points to trade at 254.70 at the close. Visa Inc Class A (NYSE:V) declined 2.06% or 4.30 points to end at 204.66 and Home Depot Inc (NYSE:HD) was down 1.81% or 4.97 points to 269.66.
The top performers on the S&P 500 were Unum Group (NYSE:UNM) which rose 8.21% to 19.90, Lincoln National Corporation (NYSE:LNC) which was up 7.15% to settle at 38.22 and Coty Inc (NYSE:COTY) which gained 6.32% to close at 3.87.
The worst performers were PayPal Holdings Inc (NASDAQ:PYPL) which was down 6.41% to 191.84 in late trade, ABIOMED Inc (NASDAQ:ABMD) which lost 6.16% to settle at 275.89 and Akamai Technologies Inc (NASDAQ:AKAM) which was down 4.38% to 108.43 at the close.
The top performers on the NASDAQ Composite were Lmp Automotive Holdings Inc (NASDAQ:LMPX) which rose 31.69% to 17.66, VivoPower International PLC (NASDAQ:VVPR) which was up 28.15% to settle at 11.610 and National CineMedia Inc (NASDAQ:NCMI) which gained 28.13% to close at 4.60.
The worst performers were Seelos Therapeutics Inc (NASDAQ:SEEL) which was down 28.52% to 0.599 in late trade, Fuwei Films Holdings Co Ltd (NASDAQ:FFHL) which lost 28.20% to settle at 4.10 and Cancer Genetics Inc (NASDAQ:CGIX) which was down 19.52% to 4.33 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1826 to 1249 and 81 ended unchanged; on the Nasdaq Stock Exchange, 1759 fell and 1067 advanced, while 77 ended unchanged.
Shares in VivoPower International PLC (NASDAQ:VVPR) rose to all time highs; rising 28.15% or 2.550 to 11.610.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 8.48% to 30.75.
Gold Futures for December delivery was up 0.15% or 3.00 to $1940.80 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in October fell 4.52% or 1.87 to hit $39.50 a barrel, while the November Brent oil contract fell 3.93% or 1.73 to trade at $42.34 a barrel.
EUR/USD was down 0.09% to 1.1838, while USD/JPY rose 0.07% to 106.25.
The US Dollar Index Futures was up 0.08% at 92.808.
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The dollar traded marginally higher in early European trade Friday, with traders cautious ahead of the release of U.S. jobs data that could shed some light on the strength of the country’s economic recovery.
At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 92.838, on course for its best week in more than two months.
The dollar has managed to halt its recent slide, but the overall sentiment remains one of weakness given the Federal Reserve has strongly implied that it intends to keep rates low for a very long time. On top of this, there remain concerns about the strength of U.S. economic growth.
ING analyst Chris Turnersaid said, in a research note.:
“If real interest rates are one of the best gauges of monetary policy settings then U.S. monetary conditions are now the loosest they have been since 2012. The dollar bear trend has only just begun. U.S. fiscal policy paralysis and a change in monetary policy strategy from the Federal Reserve make the case for the dollar bear trend extending well into next year.”
The bank has raised its end year 2021 EUR/USD forecast to 1.25 from 1.10 previously.
One gauge of the strength of the U.S. recovery will be the employment market, and data due later Friday is expected to show U.S. non-farm payrolls grew by 1.4 million in August, which would be slower than the 1.763 million jobs created in the previous month.
Employment would still be about 11.5 million below its pre-pandemic level, and the slowing growth could add pressure on U.S. policymakers to restart stalled negotiations for another fiscal package.
Elsewhere, EUR/USD dropped 0.1% to 1.1839, extending a pullback from a two-year high hit on Tuesday.
German industrial goods orders rose by a smaller-than-expected 2.8% on the month in July, although an upward revision to the June numbers left the actual level not far off consensus forecasts, according to Pantheon Macroeconomics analyst Claus Vistesen.
GBP/USD dropped 0.1% to 1.3272, retreating from its highest level in almost a year due to a lack of progress in trade negotiations between Britain and the European Union.
Senior U.K. officials see only a 30%-40% chance that there will be a Brexit trade agreement with the European Union due to an impasse over state aid rules and fisheries rights, The Times reported Friday.
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Gold fell a fourth straight day on Friday, losing 2% on the week and plumbing lows near $1,920 in a slide that raised questions on how much volatility was in store for the metal that hit $2,000 earlier in the week.
Credit Suisse (SIX:CSGN) said in a note:
“The core bias remains to view this as consolidation in the core bull trend, with eventual new highs expected above $2,075/80, with resistance then seen at $2,300. But, they do not look for a rush back to new highs and believe investors should be prepared for a lengthy sideways phase. Key support for gold stays seen at $1,887/37.”
Gold for December delivery on Comex settled Friday’s regular New York session down $3.50, or 0.2%, at $1,934.30 per ounce. The benchmark U.S. gold futures contract lost $40 over the week from an unexpected surge in the dollar – despite a drop in bond yields from earlier in the week that questioned the greenback’s rally.
In Friday’s trade, the Dollar Index was, however, helped by a positive U.S. jobs report for August. The U.S. 10-Year Treasury note also jumped a whopping 15% on the day, setting the stage for weaker gold prices.
Gold, however, recouped its losses in “after-hours” trade in New York, with the December contract on Comex rising $5.60, or 0.3%, to $1,943.40 by 3:00 PM ET (19:00 GMT).
The spot price of gold, which reflects real-time trades in bullion, was also higher by the same hour, trading at $1,935.60 to show a gain of $4.59 or 0.2%.
Gold has been beset with volatility since returning to the $2,000 territory on Tuesday for the first time in 10 days.
For the yellow metal to recapture its “July momentum” which delivered such highs, a new coronavirus stimulus bill might be needed. The Trump administration has haggled for weeks on the size of the bill, which rival Democrats think should be around $2 trillion versus the White House’s plans for a package that might be four times smaller.
On the contrary, the dollar could get stronger if next week’s meeting of the European Central Bank transmitted dovish signals on the euro – the main forex rival to the greenback. Rajan Dhall at FXStreet said:
“Another week and another deluge of headlines saying the U.S. government have not agreed on a fiscal deal. The negotiations are still continuing but there has been no word of any resolution any time soon. The market will be interested to find out if the ECB are willing to look at more stimulus.”
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It was great while it lasted, but the $40 support for U.S. crude may be something more elusive for the oil bull for now.
With the extended Labor Day holiday weekend symbolically bringing an end to the peak U.S. summer driving season, a familiar old theme seems to be making its rounds in the oil market: There may be more supply and less demand hereon.
And it’s all coming at the wrong time for crude bulls – just as global producer alliance OPEC decides to scale back on production cuts, the dollar turns mighty to weigh on commodity prices and stocks on Wall Street tumble in a broad aversion of risk.
While the U.S. August jobs report came within expectations, continued anxiety over the coronavirus and how quickly – or otherwise – a vaccine is delivered to the market was holding up confidence across markets, analysts said. Even gold, the traditional safe-haven, couldn’t muster a rally. Surging Treasury yields, meanwhile, didn’t help the dollar.
New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled the day down $1.60 cents, or almost 4%, at $39.77 per barrel. For the week, WTI slumped 7.4%, its biggest weekly drop since June.
London-traded Brent, the bellwether for global crude prices, closed the New York session down $1.41, or 3.2%, at $42.66. For the week, Brent lost 5.3%. Like WTI, it was Brent’s biggest drop in a week since June.
Ed Moya, an analyst at New York’s OANDA, said:
“Crude prices can’t shake off the strong dollar. Oil could remain in the red if the global stocks rout continued.”
Natural Gas (Hellenic Shipping News)
Through the worst public health crisis in many decades, U.S. natural gas prices were low and stable from January until the end of July. For the first half of this year, prices were just $1.81 per MMBtu, their lowest since at least 1989. But unpredictably so, August proved to be a much different story. Prices through the month rose nearly 45%. We are now seeing the highest prices since mid-November – seemingly out of nowhere.
Analysts are scrambling to describe what happened in August to surge gas prices. But neither the technicals nor the fundamentals neatly explain such a jump. The weather was nothing bullish, and gas storage has been overflowing. At 3,420 Bcf, we now have a 20% surplus to year-ago levels and 15% more than the five-year average. U.S. gas production, however, has been mostly flat. Output for August was 86-87 Bcf/d, down from the 93-94 Bcf/d level we were at pre-pandemic. And this past week, Hurricane Laura shut-in “82% of oil, 59% of natural gas output in U.S. Gulf of Mexico” so national output did dip to 85 Bcf/d.
But still, especially as the shale-era since 2008 has lifted our production zones away from the vulnerable Gulf of Mexico to the inland shale plays like Appalachia and the Permian basins, hurricanes should be mostly bearish events. They lower gas demand by cutting electricity needs and shutting-in exports. In particular, the southeast and southwest regions have installed huge coal-to-gas fuel switching. Florida, for instance, has used gas to generate a staggering 76% of its electricity for the first half of 2020. This past week, U.S. LNG exports were shut-in from Hurricane Laura, with feedgas demand falling from 5.2 Bcf/d to 2.0 Bcf for August 22-27.
We all knew that gas prices were unsustainably sunk for the first seven months of 2020, generally in the extremely low range of $1.60 to $1.90. This is especially true since natural gas is on its way to surpass oil and become our most vital source of energy – likely at some point within the next five to seven years. Through the ongoing pandemic, U.S. gas usage could be classified as “surprisingly high and on par with year-ago levels.” In fact, we set a record for gas power generation in July, one day hitting a whopping 47 Bcf/d.
Easily the most bearish factor for the gas market through COVID-19 has been the huge drop in U.S. LNG exports, which hit a booming ~9.6 Bcf/d at the end of January until spiraling to ~3.3 Bcf/d for July – driven by low prices and demand globally. This past week, however, U.S. piped gas exports to Mexico were up to all-time record levels at 6.7 Bcf/d. All told, U.S. gas consumption for the three main sectors of power, industrial, and res/comm was at 73-75 Bcf/d for August, right where it was for July.
Looking forward, the U.S. Energy Information Administration has natural gas prices averaging $2.11 this year and $3.25 for 2021. The primary explanation for such a jump is that the Administration sees production continuing to fall, averaging just 84 Bcf/d next year. Not me. I see higher prices for both oil and gas bringing on more supply, reaching back up over 90 Bcf/d in a matter of months. We will need the new production because winter demand spikes 40-60% over summer, not to mention a much-improved outlook for exports.
But with the RSI hitting 73 on Friday, an overbought market is already beginning to pull pricing back down a bit, down 8% this week to $2.45 as of this morning. And temperatures are cooling down. Stay tuned, as we saw in 2018 (almost hitting $5.00) and 2019 (almost hitting $4.00), November is that mountain on the horizon. November is the key month for gas prices to really spike – with a cold and early start to winter prone to spooking the market.
Source: Forbes
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