Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.88%
U.S. stocks were lower after the close on Friday, as losses in the Utilities, Basic Materials and Technology sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.88%, while the S&P 500 index declined 1.12%, and the NASDAQ Composite index lost 1.07%.
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The best performers of the session on the Dow Jones Industrial Average were Johnson & Johnson (NYSE:JNJ), which rose 1.37% or 2.01 points to trade at 149.18 at the close. Meanwhile, UnitedHealth Group Incorporated (NYSE:UNH) added 1.00% or 3.04 points to end at 308.02 and Merck & Company Inc (NYSE:MRK) was up 0.20% or 0.17 points to 85.81 in late trade.
The worst performers of the session were Boeing Co (NYSE:BA), which fell 3.81% or 6.39 points to trade at 161.14 at the close. Apple Inc (NASDAQ:AAPL) declined 3.17% or 3.50 points to end at 106.84 and International Business Machines (NYSE:IBM) was down 1.73% or 2.16 points to 122.76.
The top performers on the S&P 500 were Aptiv PLC (NYSE:APTV) which rose 6.80% to 88.95, Marathon Oil Corporation (NYSE:MRO) which was up 2.99% to settle at 4.82 and News Corp A (NASDAQ:NWSA) which gained 2.83% to close at 15.64.
The worst performers were H&R Block Inc (NYSE:HRB) which was down 7.27% to 13.90 in late trade, Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) which lost 5.85% to settle at 16.25 and Carnival Corporation (NYSE:CCL) which was down 5.73% to 15.31 at the close.
The top performers on the NASDAQ Composite were Cassava Sciences Inc (NASDAQ:SAVA) which rose 42.03% to 10.07, Westport Fuel Systems Inc (NASDAQ:WPRT) which was up 38.89% to settle at 2.250 and ProPhase Labs Inc (NASDAQ:PRPH) which gained 29.00% to close at 3.870.
The worst performers were Oasis Midstream Partners LP (NASDAQ:OMP) which was down 16.98% to 7.58 in late trade, Unico American Corporation (NASDAQ:UNAM) which lost 14.85% to settle at 5.08 and Pandion Therapeutics Holdco Llc (NASDAQ:PAND) which was down 14.70% to 14.33 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2023 to 1059 and 81 ended unchanged; on the Nasdaq Stock Exchange, 1444 fell and 1433 advanced, while 59 ended unchanged.
Shares in News Corp A (NASDAQ:NWSA) rose to 52-week highs; gaining 2.83% or 0.43 to 15.64. Shares in Cassava Sciences Inc (NASDAQ:SAVA) rose to 52-week highs; gaining 42.03% or 2.98 to 10.07. Shares in ProPhase Labs Inc (NASDAQ:PRPH) rose to 52-week highs; gaining 29.00% or 0.870 to 3.870. Shares in Pandion Therapeutics Holdco Llc (NASDAQ:PAND) fell to all time lows; falling 14.70% or 2.47 to 14.33.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 2.38% to 25.83.
Gold Futures for December delivery was up 0.40% or 7.85 to $1957.75 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in October unchanged 0.00% or 0.00 to hit $40.97 a barrel, while the November Brent oil contract fell 0.48% or 0.21 to trade at $43.09 a barrel.
EUR/USD was down 0.06% to 1.1840, while USD/JPY fell 0.16% to 104.56.
The US Dollar Index Futures was up 0.05% at 93.018.
The dollar is set to snap a two-week losing streak, raising concerns about whether the greenback has really found its footing after five-straight months of declines, with lower for longer interest rates expected to persist.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was flat at 92.97.
The dollar’s sluggish end to the week comes just days after the Federal Reserve left rates unchanged and tied monetary policy guidance to inflation rising above 2% for some time. But the decision was accompanied by projections that suggest rates hikes would remain on hold at least through 2023, and inflation unlikely to get above the 2% level by then. ING said in a note:
“As long as market expectations of an economic rebound hold, we’d say negative real yields will keep the dollar bear trend intact and investors will use position adjustments (like today) to reset dollar short positions.”
Adding to the dollar woes, the prospect of the economy receiving another shot of stimulus from congress appears murky, at best, even as economists warn that a lack of fiscal support could halt the current economic rebound.
EUR/USD traded flat $1.1850, while GBP/USD fell 0.37% to $1.2924, with the latter shrugging off better-than-expected retail sales data amid ongoing fears that the odds of a no-deal Brexit are rising.
USD/JPY traded fell 0.13% to 104.59 while USD/CAD added 0.27% to $1.3199.
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Gold ended up for a second straight week, benefitting from Friday’s dip in the dollar which has boxed the yellow metal in a range after the record highs of August.
U.S. gold for December delivery settled up $12.20, or 0.6%, at $1,949.90 per ounce. The week’s gain was just $2, though enough to put it in positive territory.
Spot gold, which reflects real-time trades in bullion, was up $10.74, or 0.6%, at $1,954.67 by 2:28 PM ET (14:28 GMT), recouping all of Thursday’s decline. For the week, bullion showed a gain of 0.7%.
Gold chartist Rajan Dhall said in a blog on FX Street, using the trading symbol for bullion:
“If XAU/USD breaks $1,974 then the (up)trend could be back on.”
Gold bulls have been trying to revive momentum in the yellow metal since the market’s slump from August record highs of nearly $2,090 an ounce on COMEX and $2,073 on bullion.
But they’ve been hamstrung by the strength in the Dollar Index, which has largely retained the key bullish handle of 93 points despite monetary dovish policy from the Federal Reserve.
In its September policy statement issued Wednesday, the Fed said it expected to increase in coming months its holdings of Treasury securities and agency mortgage-backed securities, “at least at the current pace, to sustain smooth market functioning and help foster accommodative financial conditions.”
Yet, the dollar rose after that announcement, hitting a one-week of 93.63 on Thursday, although it fell back to under 92.78 on Friday.
Dhall said in his blog that he expected a choppy week ahead for bullion, which could still turn out to be positive, adding that the main consolidation low stood at $1,915.50:
“The interesting thing about the price action is the fact that there (are) both lower highs and higher lows. There is no point analyzing the indicators as they are both in the mid-zone. Overall, a break to the upside looks more likely at the moment and the green resistance is the one to watch for next week.”
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Crude oil prices rebounded after a sharp dip in early trading in New York on Friday, as traders focused more on the promise of output discipline from OPEC and its friends rather than on the prospect of increased supply due to a peace agreement in Libya, a major exporter.
Prices had dipped after newswires reported that warlord Khalifa Haftarl, who is fighting the UN-recognized government in Tripoli, had approved an end to the blockade of the country’s oil installations. In theory, that could release up to 900,000 barrels a day of crude into the world market, based on what Libya was exporting before its civil war interrupted shipments. However, this is a story that has seen many false dawns, and the National Oil Company said it would only lift ‘force majeure’ on its contracts when all oil facilities and export terminals have been ‘demilitarized’.
By 11 AM ET (1500 GMT), U.S. crude futures were up 0.8% at $41.28 a barrel, on course for a gain of 10% on the week, after an aggressively bullish intervention by Saudi Arabia’s Oil Minister Prince Abdulaziz bin Salman at a ministerial meeting of the so-called ‘OPEC+’ bloc on Thursday. Brent futures were up 0.2% at $43.37 a barrel.
Prince Abdulaziz had warned speculators not to “test the resolve” of the world’s largest oil exporters, many of whom still need a higher oil price to balance their budgets. He also had harsh words for quota-busters such as the United Arab Emirates (although he didn’t name them), and held out the possibility of an emergency meeting to decide deeper production cuts if prices continue to come under pressure from a shortfall in global demand.
Rystad Energy analyst Bjornar Tonhaugen said in emailed comments:
“We believe the OPEC+ talks, leaving the option on the table for an additional extraordinary meeting as well, has jolted some confidence into bullish minds. The belief may be that OPEC+ will not come “too late to the party” (in terms of adjusting OPEC+ policy) if demand takes another leg down due to new COVID-restrictions in the near term.
Those new restrictions are looking ever more likely as India’s rate of new infections spirals toward the level of 100,000 a day, while European countries tighten their restrictions on social gatherings to clamp down on a resurgence of cases over the late summer. The capitals of both Spain and the U.K. are facing fresh lockdown measures, according to officials in both countries. Over one-fifth of Madrid’s hospital beds are now occupied by coronavirus patients, according to official data quoted by El Pais.
Rystad’s Tonhaugen noted that it still wasn’t clear whether words from OPEC would be enough to turn the market around, given that weak refining margins are damping demand from refineries in various key regions.
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Natural Gas (ETF Daily News)
Time flies. It seems like yesterday when the winter season of 2019/2020 ended, and natural gas began flowing into storage across the United States in March. Stockpiles fell to a low of 1.986 trillion cubic feet at the end of last winter, which was substantially higher than the previous year when they were at 1.107 tcf at the start of the injection season.
The active month natural gas futures contract on NYMEX is now October, and it will not be long before it rolls to November, the month when increasing demand for natural gas will cause the level of stockpiles to decline. Demand amidst the global pandemic remains the most significant factor for energy commodities in the current environment. However, the US election could determine the future path of energy policy in the world’s leading producer of oil and gas.
As we head towards November, natural gas inventories will be higher than last year when they peaked at 3.732 tcf. After the EIA’s latest supply data, it looks like they will rise above four tcf for the third time since the agency began reporting data. The United States Natural Gas Fund (UNG) follows the NYMEX natural gas futures price higher and lower. The BOIL and KOLD ETN products provide market participants with leverage on the up and downside without venturing into the futures arena.
The market expected a 79 bcf injection into storage
According to Estimize, a crowdsourcing website, the consensus was for a 79 billion cubic injection into natural gas storage across the United States for the week ending on September 11.
Source: CQG
As the chart highlights, the EIA reported an injection of 89 billion cubic feet, lifting the total amount of natural gas inventories to 3.614 trillion cubic feet as of September 11. While Thursday’s data was the most substantial injection since mid-June, the percentage over last year’s levels declined to 17.4%, which was the twenty-fourth consecutive drop. There was 13.2% more natural gas in storage as of the end of last week than the five-year average.
Stockpiles are heading into the peak season for demand at an elevated level.
Supplies are steaming towards the four trillion cubic feet level as the injection season winds down
The 2020/2021 withdrawal season in the natural gas market is approximately nine weeks away. Exceeding last year’s peak of 3.732 trillion cubic feet would require an average injection of 1.4 bcf. The level of stockpiles will move above last year’s high in next week’s EIA release.
Since the EIA began reporting supply data, natural gas in storage at the start of the winter months only rose marginally above the four trillion cubic feet level twice, in late 2015 and 2016. In November 2016, stockpiles climbed to a record 4.047 tcf.
Reaching a new peak in 2020 would require an average injection of 48.3 bcf over the next nine weeks. The high level of stocks sent the natural gas price back to the $2 level on September 17, after trading at a new high for 2020 less than one month ago.
Inventories remain a warning sign- The November 3 election is a significant factor for the path of the natural gas price
Natural gas fell to its lowest price since August 3 when it hit $2.003 per MMBtu on the NYMEX October futures contract.
Source: CQG
Time will tell if the $2.003 per MMBtu low on September 17 will create a double bottom formation, or if it is a gateway to prices below the $2 level. The total number of open long and short positions in the natural gas futures market has not moved all that much over the past month as it remained in a range between 1.23 and 1.262 million contracts. The decline from $2.743 to $2.002 sent price momentum and relative strength indicators into oversold territory on the daily chart. Meanwhile, the spike lower on September 17 lifted daily historical volatility above 75%, the highest level since mid-August.
I had been bearish on the natural gas market during the rise to $2.743, and once it turned lower. Taking profits at below $2.10 makes sense. The peak season for demand is only nine weeks away, so I believe natural gas will find a higher bottom than the late June low. However, the level of stockpiles will make reaching the November 2019 high and level of critical technical resistance at $2.905 a challenge.
I am more comfortable with a long than a short position at the $2 level. However, I would use a tight stop on any position.
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