Written by Investing.com Staff, Investing.com
S&P Closes at Record as Tech Shows Strength
The S&P 500 closed at record highs Friday, as tech continued to rack up gains to offset losses in value stocks on fears of further Covid-19 restrictions ahead as Americans travel over the holidays.
The Dow Jones Industrial Average rose 0.13%, or 38 points. The S&P 500 was up 0.28%, while the Nasdaq Composite added 0.92%.
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Tech was among the biggest gainers of the day, led by the Fab 5 stocks as investor appetite for growth stocks remained intact.
Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) were higher.
The uptick in tech stocks helped the broader market fend off a weakness in value stocks at a time when some are concerned the uptick in Covid-19 infections is likely to lead to further restrictions in the U.S. ING said in a note:
“The number of cases was rising sharply before last week but holiday travel and socialising could see an acceleration that necessitates aggressive action to prevent healthcare systems buckling under the pressure of hospitalisations.”
A fall in industrials and energy led the move in lower in value stocks – those linked to the performance of the economy.
Energy fell nearly 1% as investors appeared to take profits, but remains on track for a third-week of gains following strong early-week gains amid rising oil prices ahead of a key OPEC meeting next week. RBC said in a note:
“Despite some signs of daylight between producers over deviating from the tapering timeline, we believe that OPEC+ will opt for a short extension of the current 7.7 mb/d cut when they meet next week.”
Online retailer platform were also in focus on Friday, with Shopify (NYSE:SHOP) and Etsy (NASDAQ:ETSY) up sharply, as online sales racked up gains. Online sales rose to a rose 22% to a record $5.1 billion on Thanksgiving Day, according to Adobe (NASDAQ:ADBE) Analytics.
Looking to the week ahead, market sentiment in the week ahead will be driven by developments on Covid-19 vaccines, further restrictions to curb the flow of the virus and any progress on US fiscal stimulus, ING said in a note.
Wall Street Edges Higher in Holiday-Thinned Trade; Dow up 120 Pts
Australia stocks lower at close of trade; S&P/ASX 200 down 0.53%
The dollar weakened in early European trade Friday, set to post weekly losses with traders expecting large-scale stimulus from the new administration to combat the Covid-19 pandemic.
At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 91.892, near the three-month low since late Thursday. Volumes are likely to remain limited after Thursday’s Thanksgiving holiday in the U.S., with many traders set to enjoy a long weekend.
EUR/USD climbed 0.1% to 1.1926, close to a two-month high, while USD/JPY fell 0.2% to 104.06. Additionally, AUD/USD rose 0.2% to 0.7372, near a three-month high, while NZD/USD gained 0.2% to 0.7021, near its strongest level in over two years.
Analysts at ING said in a research note:
“The dollar is back at its 2018 lows with DXY [the Dollar Index] breaking below the key 92.00 support. [The pandemic] appears particularly concerning as major U.S. cities are experiencing large spikes in cases which may fuel further speculation that President-elect Joe Biden will opt for tougher restrictions once he takes office.”
Outgoing President Donald Trump said on Thursday he will leave office if the Electoral College votes for Biden, the closest he has come to conceding the Nov. 3 election and another sign of the returning normalcy in U.S. political circles.
Biden has made it clear that tackling the pandemic is his first priority, and has called on U.S. lawmakers to pass a new stimulus bill before he officially takes office in January. His nomination of Janet Yellen, former head of the Federal Reserve who is credited with helping steer the economic recovery after the 2007 financial crisis and ensuing recession, has also played into the underlying belief that more fiscal help is on its way, likely pressurising the dollar.
GBP/USD gained 0.1% to $1.3369, near a three-month high of $1.3399 it touched on Thursday, as market participants look for progress on Brexit talks.
The European Union chief negotiator Michel Barnier will talk on Friday with some of the bloc’s ministers responsible for fisheries to discuss the state of play in the trade discussions with Britain, an EU official said.
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Run, gold bull, run – away from the bear that is.
The selloff in what is arguably the world’s most cherished, albeit vaunted, metal showed little signs of slowing on Friday as it fell to $1,700 territory – its first foray there since June. Craig Erlam, analyst at New York’s OANDA, said:
“Gold is really struggling to pick itself up and dust itself off after taking quite a beating in recent weeks. Gold looks vulnerable to another tumble, (as) the path of least resistance still looks to be below.”
It’s been a miserable time for anyone who’s been bullish or long gold as the yellow metal posted its third straight weekly loss, while heading for a fourth monthly drop in a row since July. While gold tanked on signs that upcoming vaccines will greatly help curb the Covid-19 pandemic in coming months, stocks and risk assets like oil have rallied instead.
In Friday’s trade, the spot price of gold, which reflects real-time trades in bullion, was down $21.55, or about 1.2%, at $1,787.55 by 1:00 PM ET (18:00 GMT). Bullion earlier fell to $1,774, a level not seen since July 7.
Gold futures for December delivery on New York’s Comex settled the day’s trade down $23.60, or 1.3% at $1,1781.90. It earlier hit $1,770.65, a low not seen since June 22, when it sunk to an intraday bottom of $1,769.
For the week, the benchmark U.S. gold futures contract lost 4.8% – almost matching the dive from two months ago when outgoing U.S. president, Donald Trump, announced he wasn’t interested in pursuing a second fiscal stimulus package for the Covid-19. It was the first U.S. stimulus of around $3 trillion or more, issued in March, that helped gold futures hit a record high of almost $2,090 in early August.
While Trump has wavered several times on the second stimulus, his loss of the November 3 U.S. election has now made him a lame-duck leader, ushering in hope that President-Elect Joe Biden will be able to get a second fiscal package together when he’s sworn in on Jan. 20. That helped gold bulls to stay somewhat positive despite booking continued losses.
But news of Covid-19 vaccine development efforts over the past three weeks have also dealt a huge blow to those long the precious metal, as money continued to leave the safe haven for risk-on assets such as stocks and oil. Friday’s settlement in December gold, for instance, was some $300 an ounce below its August record high.
Chartists said the metal could have more to lose, based on its downside trajectory. Guillermo Alcala said in a blog on FX Live:
“On the way south next areas of interest are $1,760, the 50% Fibonacci Retracement of the March – July rally and $1,700 (June 15 lows).”
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Crude prices posted a fourth straight week of gains returning oil to a bull market ahead of an OPEC+ meeting where the industry’s most powerful were likely to agree not to raise production at this point to preserve the momentum.
Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, North Carolina, said:
“It remains a perfect storm of buying from CTAs while the rest of the market either is not long enough or short and covering.
“The move we have seen in the market in terms of structure is a real ‘head scratcher’,” adds Shelton. “The idea of exploding Covid cases and a vaccine that will have a larger effect in six months than now only encourages us to sell the curve. What most of us cannot explain is the strength.”
New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled down 18 cents, or 0.4%, at $45.53 per barrel.
London’s Brent, the global benchmark for oil, finished the session up 45 cents, or 0.9%, at $48.25.
For the week, WTI rose 8% while Brent gained 7.3%.
All in, crude prices have tacked on about $10 a barrel, or almost 28%, since the week ended Oct. 23, when it hit a low of $34.92. That technically positions oil in a bull market, based on the minimum 20% gain required from a bottom.
Oil’s four-week rally came on the back of encouraging news on potential COVID-19 vaccines from AstraZeneca (NASDAQ:AZN) and others. However, questions have been raised over AstraZeneca’s “vaccine for the world,” with several scientists sounding caution over the trial results.
JPMorgan (NYSE:JPM) said in a note:
“While a successful vaccine rollout should break the link between infection and mobility, even then global oil demand will likely only reach its pre-pandemic run rate by mid-2022.”
The gains in crude prices also precede a meeting next week by the 13-member Saudi-steered OPEC, or the Organization of the Petroleum Exporting Countries, with 10 allies led by Russia.
The so-called combined OPEC+ group is leaning towards delaying next year’s planned increase in oil output, according to three sources close to the alliance quoted by the Wall Street Journal.
OPEC+ was originally planning to raise output by 2 million barrels per day (bpd) in January – about 2% of global consumption – after record supply cuts this year. Ministers of the alliance are to meet on Monday, after ground-laying talks on Saturday involving their direct reports. JPMorgan added in its note:
“We reiterate our view that the alliance will likely choose to delay the 2 million bpd tapering decision on 30 November by a quarter, from January 1 to April 1.”
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Natural Gas (Hellenic Shipping News)
US natural gas stocks posted a sizable injection last week at a time when the Lower 48 traditionally switches to net draws, while the remaining NYMEX Henry Hub winter strip tumbled 18 cents following the report.
Storage inventories increased by 31 Bcf to 3.958 Tcf for the week ended Nov. 13, the US Energy Information Administration reported the morning of Nov. 19.
The injection proved much more than an S&P Global Platts’ survey of analysts calling for a 22 Bcf build. Responses to the survey ranged for an addition of 11 Bcf to 30 Bcf. The build was very bearish compared to the 66 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 24 Bcf, according to EIA data. It also marked the second-consecutive week the EIA number surpassed market expectations.
US supply and demand balances were considerably looser, featuring demand losses of 4.0 Bcf/d week over week, according to S&P Global Platts Analytics. Weaker consumption was the result of very mild temperatures driving residential and commercial space heating down by 4.7 Bcf/d. The soft demand resulted in some temporary production curtailments in the Northeast, as cash prices traded below $1.00/MMBtu.
Storage volumes now stand 293 Bcf, or 8%, more than the year-ago level of 3.665 Tcf and 231 Bcf, or 6.2%, more than the five-year average of 3.727 Tcf. The injection season has now extended one week further than usual.
The NYMEX Henry Hub December contract tumbled 14 cents to $2.574/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. The remaining winter strip, January through March, lost 14 cents to average $2.67/MMBtu, a decline of more than 40 cents from one week prior.
Natural gas prices saw immense selling pressure this week, with winter 2020-21 prices off more than 30% relative to its year-to-date high established late last month. The sizeable declines have been driven by very mild realized and expected temperatures, with weather models forecasting mild temperatures to persist into December, according to Platts Analytics. Further stoking bearish sentiment is production, which in recent days has eclipsed 90 Bcf/d for the first time since the spring. Higher output is largely the result of Northeast and Haynesville producers ramping up production ahead of the winter.
Platts Analytics’ supply and demand model currently forecasts a 27 Bcf withdrawal for the week-ending Nov. 20, which would grow the surplus versus the five-year average by 10 Bcf as the heating season kicks off one week later than normal. Cooler, but still milder-than-normal temperatures, has boosted residential and commercial demand by 9.7 Bcf/d week over week.
Source: Platts
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