Written by Investing Daily, Investing Daily
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.37%
U.S. stocks were lower after the close on Friday, as losses in the Oil & Gas, Financials and Consumer Goods sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average lost 0.37%, while the S&P 500 index lost 0.24%, and the NASDAQ Composite index lost 0.21%.
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The best performers of the session on the Dow Jones Industrial Average were Johnson & Johnson (NYSE:JNJ), which rose 1.76% or 2.46 points to trade at 142.22 at the close. Meanwhile, Walmart Inc (NYSE:WMT) added 1.53% or 2.19 points to end at 145.66 and Honeywell International Inc (NYSE:HON) was up 0.69% or 1.27 points to 184.55 in late trade.
The worst performers of the session were UnitedHealth Group Incorporated (NYSE:UNH), which fell 2.00% or 7.08 points to trade at 347.32 at the close. American Express Company (NYSE:AXP) declined 1.71% or 1.68 points to end at 96.43 and Dow Inc (NYSE:DOW) was down 1.69% or 0.83 points to 48.14.
The top performers on the S&P 500 were Coty Inc (NYSE:COTY) which rose 19.16% to 3.98, News Corp B (NASDAQ:NWS) which was up 8.92% to settle at 15.14 and News Corp A (NASDAQ:NWSA) which gained 8.39% to close at 15.18.
The worst performers were Flowserve Corporation (NYSE:FLS) which was down 9.42% to 28.64 in late trade, ViacomCBS Inc (NASDAQ:VIAC) which lost 7.48% to settle at 28.95 and DXC Technology Co (NYSE:DXC) which was down 6.84% to 18.24 at the close.
The top performers on the NASDAQ Composite were Mogo Inc (NASDAQ:MOGO) which rose 36.57% to 1.830, Sundial Growers Inc (NASDAQ:SNDL) which was up 34.09% to settle at 0.29 and Glu Mobile Inc (NASDAQ:GLUU) which gained 28.10% to close at 8.85.
The worst performers were Assembly Biosciences Inc (NASDAQ:ASMB) which was down 68.30% to 5.04 in late trade, Autobytel Inc (NASDAQ:AUTO) which lost 37.76% to settle at 2.390 and Global Blood Therapeutics Inc (NASDAQ:GBT) which was down 37.15% to 37.91 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1757 to 1075 and 90 ended unchanged; on the Nasdaq Stock Exchange, 1706 fell and 984 advanced, while 74 ended unchanged.
Shares in Honeywell International Inc (NYSE:HON) rose to all time highs; gaining 0.69% or 1.27 to 184.55. Shares in Assembly Biosciences Inc (NASDAQ:ASMB) fell to 3-years lows; losing 68.30% or 10.86 to 5.04. Shares in Global Blood Therapeutics Inc (NASDAQ:GBT) fell to 52-week lows; losing 37.15% or 22.41 to 37.91.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 7.58% to 25.49.
Gold Futures for December delivery was up 0.33% or 6.45 to $1953.25 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in December fell 3.76% or 1.46 to hit $37.33 a barrel, while the January Brent oil contract fell 3.13% or 1.28 to trade at $39.65 a barrel.
EUR/USD was up 0.49% to 1.1879, while USD/JPY fell 0.18% to 103.28.
The US Dollar Index Futures was down 0.28% at 92.257.
European Stocks Fall on Election Uncertainty and Virus Fears
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The dollar edged higher in early European trade Friday, with the result of the contentious U.S. presidential election still unknown and the possibility of a legal battle likely to lead to prolonged uncertainty.
At 2:45 AM ET (0745 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 92.537. EUR/USD rose 0.1% to 1.1838, USD/JPY fell 0.1% to 103.44, while the risk sensitive AUD/USD fell 0.2% to 0.7269.
The U.S. presidential battle still remains undecided early Friday, but Democratic candidate Joe Biden has an edge over President Donald Trump, with a few important states still counting votes.
Trump’s legal challenges to vote counts in Nevada, Pennsylvania, Georgia and Michigan have so far had no effect.
Trump has also questioned the election’s credibility. He said late on Thursday, as usual without presenting any evidence:
“If you count the legal votes, I easily win. If you count the illegal votes, they can try to steal the election from us.”
ING analyst Chris Turner said in a research note:
“FX markets have reacted to news of a much closer U.S. election by selling currencies most exposed to the global recovery story and buying USD and JPY. Certainly, the prospect of at least smaller fiscal stimulus, if not an outright contested election – combined with poor Covid-19 trends – favor more defensive positioning this month.”
Uncertainty about the U.S. economic recovery from the pandemic is also growing, along with the number of Covid-19 cases, with Wednesday’s private payrolls data and Thursday’s initial jobless claims both disappointing. This put the focus squarely on October’s nonfarm payrolls data, due later in the day, which is forecast to show a slight slowdown in job creation.
The Federal Reserve kept its monetary policies unchanged on Thursday, but Chair Jerome Powell stated that more fiscal and monetary support was needed as rising coronavirus cases clouded the outlook for the economic recovery.
Elsewhere, GBP/USD fell 0.1% to 1.3138, edging lower after Thursday’s strong gains on the back of the Bank of England deciding to increase its bond-buying program to try and support the country’s weakening economy.
EU Internal Market Commissioner Thierry Breton said Friday there was only a “50/50” chance that Britain and the European Union will be able to reach a deal over the terms of Britain’s exit from the EU.
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Gold jumped almost 4% on the week in one of its biggest post-summer rallies as Democrat Joe Biden’s lead in the U.S. election rekindled hopes for an economic stimulus – although rivals aligned with President Donald Trump promised to fight such plans.
New York-traded gold for December delivery settled up $28.20, or 3.8%, at $1,951.70 per ounce, after hitting a six-week high of 1,961.75.
Spot gold, which reflects real-time trades in bullion, rose $4.87, or 0.3%, to $1,954.39 by 2:22 PM ET (18:22 GMT).
Biden is likely to get as many as 302 electoral college votes from Tuesday’ election, versus the minimum 270 needed for a win, after all votes are tallied across the 50 US states, both the CNN and Fox news networks reported. Trump has not conceded to Biden, alleging fraud in the election, which he said he will fight all the way to the Supreme Court. Ed Moya, analyst at OANDA in New York, said:
“The COVID-19 spread across the US will force a return to lockdowns and make Congress deliver at least a $1 trillion dollars in stimulus by December. The stimulus trade wave won’t be as big as many anticipated but it should still help gold break the October trading range.”
Democrats, who control the House, reached agreement in March with the Trump administration and Senate Republicans to pass the Coronavirus Aid, Relief and Economic Security (CARES) stimulus. That package dispensed roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.
Since then, the two sides have been locked in a stalemate on a successive relief plan to CARES. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.
House Speaker and top Congressional Democrat Nancy Pelosi told reporters on Friday her next immediate priority was to cajole members of the Trump administration to resume Covid-19 stimulus talks disrupted by the election.
Democrats and existing members of the Trump administration have between now and the January 20 inauguration of the next president to hold talks in a so-called “lame duck” session. Pelosi said:
“I’m calling on the administration to come back to the table. Congress has committed to passing an Omnibus Appropriations bill (for the Covid-19). This is the core of our work in the lame duck, so we don’t have a pandemic killing hundreds of thousands of people and infecting millions more.”
But top Senate Republican Mitch McConnell indicated that he will continue to fight Pelosi’s plans for a large stimulus. He pointed to economic statistics, including a 1% point drop in the unemployment rate, that showed a smaller stimulus package targeted at the pandemic’s effects would be adequate. McConnell told reporters:
“I think it reinforces the argument that I’ve been making for the last few months, that something smaller – rather than throwing another $3 trillion at this issue – is more appropriate.”
More than 9.6 million Americans have been infected by Covid-19, and over 233,000 have died from complications related to the virus.
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Oil prices fell on the day and rebounded on the week, exhibiting volatility unsurprising for the world’s most politically-sensitive commodity as Democrat Joe Biden appeared likely to take control of the White House amid vows by President Donald Trump to legally challenge the outcome.
New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled down $1.65, or 4.2%, at $37.14 per barrel. For the week, however, WTI jumped 3.8% rebounding strongly from a mid-June low of under $33.64 hit earlier in the week before it slid again on demand concerns.
London-traded Brent, the global benchmark for crude, fell $1.48, or 3.6% to settle at $39.45 per barrel. Brent rose 5.3% on the week.
Biden is heading for the minimum 270 needed to take the White House, CNN and Fox News reported.
Also weighing on oil prices Friday was realization that an eventual Biden administration could move America toward tighter Covid-19 related measures versus Trump’s relaxed approach. That aside, over the longer term, he could roll back sanctions imposed by his predecessor against one-time major crude exporter Iran.
A Tehran freed from sanctions could easily add between one million and two million barrels of oil per day to global production, seriously impacting oil prices in a market that continues to suffer from low demand forced by the Covid-19 pandemic.
Phil Flynn, analyst at Price Group Futures in Chicago, said:
“While the presidential race still has not been decided, the risk of the market’s attitude is apparent. The main reason is still the coronavirus plague that raises a concern for more oil and gas demand destruction. Also, job losses in the energy space have been racking up.”
More than 9.6 million Americans have been infected by Covid-19, and over 233,000 have died from complications related to the virus.
The United States gained 638,000 jobs in October, more than forecast by economists but less than September’s growth, the government’s monthly jobs data showed Friday.
The economy lost more than 21 million jobs for all of March and April, at the height of lockdowns forced by the COVID-19. It posted a strong rebound of 2.5 million jobs in May and 4.8 million in June. Job gains have slowed since, with 1.8 million in July, some 1.5 million in August and 672,000 in September.
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Natural Gas (Stock News)
- The market expected a 52 bcf injection into storage for the week ending on October 16, 2020
- Record supplies are on the horizon going into the winter months
- The price rose to another new high this week- How long can that last?
With October winding down, the natural gas market in the US is at an inflection point. It will not be too long before the 2020 injection season ends, and the energy commodity begins flowing out of storage at a faster rate than it flows into storage facilities. The rate of stockpile declines will be a function of the weather. The colder the winter months, the faster the stocks will drop.
We are going into the peak season for demand with the highest level of inventories in years; they could rise to a new record level in a few short weeks. The supply side of the fundamental equation does not support any significant peak season rally.
Meanwhile, 2020 is a unique year for the natural gas market in more ways than one. COVID-19 continues to weigh on demand for natural gas. Moreover, the November 3 US election will determine the future of energy policy in the nation that leads the world in oil and gas output. With less than two weeks to go before the contest, the opposition party has a substantial lead in the polls. They support more regulations and phasing out or eliminating the process of fracking to remove natural gas from the earth’s crust. A shift in the energy policies supported by the political left would lead to less natural gas production in the coming years.
Natural gas is a highly volatile commodity. While the political landscape points to falling supplies over the coming years, the short-term picture presents stockpiles that are more than sufficient to meet all requirements over the coming peak season. The United States Natural Gas Fund (UNG) tracks the price of the volatile futures that trade on the CME’s NYMEX division.
The market expected a 52 bcf injection into storage for the week ending on October 16, 2020
According to Estimize, a crowdsourcing website, the market had projected an average injection of 52 billion cubic feet of natural gas into storage for the week ending on October 16.
Source: EIA
As the chart shows, the data came in just slightly below the estimate as inventories rose by 49 bcf for the week ending last Friday. The total amount of natural gas in storage across the US was 3.926 trillion cubic feet, 9.6% above last year’s level, and 9.1% above the five-year average for mid-October. It was the twenty-ninth consecutive week where the percentage above last year’s level declined.
Record supplies are on the horizon going into the winter months
With only four weeks left in the 2020 injection season, reaching a new all-time high in stocks above 4.047 tcf is within reach. An average injection of 30.3 bcf would establish a new record in stockpiles going into the peak withdrawal season that begins in November. The bottom line is that there is plenty of natural gas to meet any adverse weather conditions during the coming winter months.
While inventories are bearish for natural gas, the start of the 2020/2021 winter season is unique. The election on November 3 will determine the future path of US energy policy. With the challenger, former vice president Joe Biden, ahead in the polls and the potential for a sweep by the opposition party, the landscape for fossil fuel production in the US could change dramatically beginning in 2021. A stricter regulatory environment and pressure from progressive democrats would likely decrease natural gas output over the coming years.
The price rose to another new high this week- How long can that last?
It seems like the potential for falling production has trumped the high level of inventories as we head into the 2020/2021 withdrawal season. Over the past week, the price of nearby NYMEX natural gas futures rose to a new and higher high above $3 per MMBtu.
Source: CQG
As the weekly chart illustrates, natural gas has made higher lows and higher highs since trading to the lowest level since 1995 at $1.432 per MMBtu in late June. Over the past week, the price rose to another new high of $3.056 per MMBtu and was trading at just above the $3 level in the aftermath of the EIA’s latest data release.
Open interest, the total number of open long and short positions in the natural gas futures market declined from 1.286 million contracts on October 5 as the price bounced from the latest higher low of $2.373 on the November futures contract. Open interest was at the 1.202 million contract level on October 21. The decline in the metric while the price moved higher is not typically a technical validation of an emerging bullish trend in a futures market. It is likely a sign of short covering by speculative shorts.
Meanwhile, weekly price momentum and relative strength indicators were rising towards overbought conditions with the price north of $3 per MMBtu. Weekly historical volatility at almost 67% is near the high for 2020, given the wide weekly trading ranges since the quarter-of-a-century low in late June.
The technical trend is higher in natural gas. The potential for falling production because of a political shift in the US is rising as we go into the November 3 election. However, stockpiles are approaching an all-time high. The amount of natural gas in storage at the end of last week was already 194 billion cubic feet above last year’s peak. Bullish and bearish factors face the natural gas market as the 2020/2021 peak season comes with the added bonus of an election that will determine the output level. A record high in stocks this November could stand as the high for a long time if the political winds blow to the left. Lower output would lead to higher prices over the coming years. The price action in the natural gas market could be telling us that the high level of stocks could turn out to be a temporary phenomenon.
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