Written by Investing.com Staff, Investing.com
U.S. stocks mixed at close of trade; Dow Jones Industrial Average up 0.49%
U.S. stocks were mixed after the close on Thursday, as gains in the Utilities, Financials and Healthcare sectors led shares higher while losses in the Oil & Gas, Technology and Consumer Services sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average gained 0.49% to hit a new all time high, while the S&P 500 index climbed 0.26%, and the NASDAQ Composite index declined 0.01%.
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The best performers of the session on the Dow Jones Industrial Average were Intel Corporation (NASDAQ:INTC), which rose 2.52% or 1.23 points to trade at 49.98 at the close. Meanwhile, Walgreens Boots Alliance Inc (NASDAQ:WBA) added 1.42% or 0.56 points to end at 39.90 and McDonald’s Corporation (NYSE:MCD) was up 1.42% or 3.00 points to 214.56 in late trade.
The worst performers of the session were Boeing Co (NYSE:BA), which fell 1.19% or 2.57 points to trade at 214.10 at the close. Chevron Corp (NYSE:CVX) declined 0.93% or 0.79 points to end at 84.54 and Apple Inc (NASDAQ:AAPL) was down 0.72% or 0.96 points to 132.76.
The top performers on the S&P 500 were Western Digital Corporation (NASDAQ:WDC) which rose 11.04% to 55.00, DXC Technology Co (NYSE:DXC) which was up 6.41% to settle at 25.90 and Micron Technology Inc (NASDAQ:MU) which gained 4.57% to close at 75.21.
The worst performers were Macy’s Inc (NYSE:M) which was down 6.48% to 11.25 in late trade, Nektar Therapeutics (NASDAQ:NKTR) which lost 5.80% to settle at 16.90 and Capri Holdings Ltd (NYSE:CPRI) which was down 3.15% to 42.37 at the close.
The top performers on the NASDAQ Composite were Bonso Electronics International Inc (NASDAQ:BNSO) which rose 81.89% to 8.185, Hoth Therapeutics Inc (NASDAQ:HOTH) which was up 43.60% to settle at 2.35 and Bionano Genomics Inc (NASDAQ:BNGO) which gained 42.86% to close at 3.000.
The worst performers were Guardion Health Sciences Inc (NASDAQ:GHSI) which was down 28.89% to 0.4181 in late trade, Histogen Inc (NASDAQ:HSTO) which lost 26.92% to settle at 0.7600 and Novan Inc (NASDAQ:NOVN) which was down 22.20% to 0.8169 at the close.
Rising stocks outnumbered declining ones on the New York Stock Exchange by 1927 to 1173 and 69 ended unchanged; on the Nasdaq Stock Exchange, 1583 fell and 1423 advanced, while 62 ended unchanged.
Shares in Micron Technology Inc (NASDAQ:MU) rose to 5-year highs; rising 4.57% or 3.29 to 75.21. Shares in Bonso Electronics International Inc (NASDAQ:BNSO) rose to 5-year highs; rising 81.89% or 3.685 to 8.185. Shares in Bionano Genomics Inc (NASDAQ:BNGO) rose to 52-week highs; up 42.86% or 0.900 to 3.000.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 0.70% to 22.61.
Gold Futures for February delivery was up 0.45% or 8.45 to $1901.85 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in February rose 0.02% or 0.01 to hit $48.41 a barrel, while the March Brent oil contract rose 0.17% or 0.09 to trade at $51.72 a barrel.
EUR/USD was down 0.64% to 1.2216, while USD/JPY rose 0.08% to 103.25.
The US Dollar Index Futures was up 0.28% at 89.898.
Dow Ends 2020 at Record High as Bulls Continue Stampede on Final Day
Dow Climbs as Strength in Financials Offsets Energy Drag (Thursday)
The Nasdaq stock index jumped 43% in 2020, its best year in the last 11 (MarketWatch)
FTSE 100 slumps on final day before exit from EU’s single market (MarketWatch)
Asian Stocks Up Over Vaccine and Global Economic Recovery Hopes for 2021 (Wednesday)
The dollar was down on Thursday morning in Asia. It ended 2020 on a down note over bets that a global economic recovery in 2021 will pull money into riskier assets, even as the growing U.S. ‘twin deficits’ of a huge budget increase and trade deficits argue for an ever-cheaper greenback.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.06% to 89.498 by 8:54 PM ET (1:54 AM GMT). The dollar saw its lowest level since April 2018 and is down 7.2% on the year.
Hopes that 2021 will be better than 2020 have led to a retreat from the safe-haven dollar, with investors increasingly turning to the more attractive riskier assets, particularly in emerging markets. Bears have also been resurrecting the ‘twin deficits’ excuse to short the dollar, with the deficits meaning that more dollars are being printed and moved overseas.
The U.S. stimulus bill, passed by the House of Representatives and the Senate during the past week, also will be negative for the dollar as U.S. debt balloons and President-elect Joe Biden promises even more measures when his administration takes office in January.
Also dampening sentiment for the dollar is the U.S. trade account. The account has been bleeding dollars as the deficit on goods hit a record $84.8 billion in November, with imports soaring past pre-COVID-19 levels. The current account deficit also saw a 12-year high in the third quarter, with a large shortfall in net financial transactions as Americans borrowed more from abroad.
Deutsche global head of G10 FX Alan Ruskin warned in a note:
“The U.S. dependence on foreign savings is increasing and at 3.4% of GDP, it is approaching a danger zone where it will become increasingly difficult to attract savings without further dollar weakness, or higher interest rates. The deterioration in the ‘twin deficits’ will do nothing to improve dollar sentiment, even if it does not as yet justify extreme dollar undershooting either.”
Across the Atlantic, the European Union (EU) is ending 2020 with a huge current account surplus, thanks in large part to Germany. The surplus means that there is a natural inflow to euros through trade, and the euro is at $1.2305, after seeing its highest since April 2018 with a gain of almost 10% for the year. Bulls are looking to see if the euro will hit $1.2413 and $1.2476, two stops on the way to 2018’s peak of $1.2555.
The USD/JPY pair inched down 0.06% to 103.10. Japanese markets are closed ahead of the new year.
The AUD/USD pair was up 0.31% to 0.7708 and the NZD/USD pair gained 0.37% to 0.7230.
The USD/CNY pair inched down 0.03% to 6.5191. Data released earlier in the day in China showed December’s manufacturing Purchasing Managers Index (PMI) at 51.9, down from the reading of 52 in forecasts prepared by Investing.com and November’s 52.1 figure. The data also showed December’s non-manufacturing PMI at 55.7, also down from November’s reading of 56.4.
The GBP/USD pair edged up 0.16% to 1.3643, levels that have not been seen since May 2018. The pound was boosted by the post-Brexit trade deal struck between the U.K. and the EU becoming law after the Queen gave her approval earlier in the day. The House of Lords gave the bill to approve the deal an unopposed third reading late on Wednesday, after MPs had voted it through by 521 votes to 73.
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“There’s a silver lining in every crisis.“
Whoever came up with that probably had no inkling that it would apply one day to the price of silver amid the coronavirus crisis. But here we are.
As silver neared the final hours of 2020, the “white metal,” as it’s also called, was up a whopping 48% on the year for its spot price, eclipsing even that of gold, the yellow metal that’s the darling of the investing and vanity world.
Spot gold, which reflects the price of bullion, was up 25% on the year. To be sure, both were having their best annum in a decade in what was also proving to be a banner year for the entire precious metals complex, which includes the six PGMs, or Platinum Group Metals, made up chiefly of platinum and palladium.
But silver was clearly the outlier of the lot, benefiting most from the dollar’s tumble to near three-year lows amid near-zero interest rates in the U.S. and U.S. federal debt extension into the trillions as Congress issued two relief packages for the COVID-19. Investors use precious metals as a hedge against inflation.
Analysts retained a favorable outlook for silver, gold and most precious metals into 2021, though that could come with some market correction as well, they said. Thomas Westwater, a technical analyst on gold, said in a blog on the Daily FX portal published a couple of days ago:
“A resumption of the broader December trend higher may likely continue in 2021. Covid-19 remains a lingering question mark for traders.”
Westwater added that, while price consolidation was highly likely in the short-term, “higher ground appears to be favored in the technical outlook.”
In Thursday’s trade, spot silver on New York’s Comex was at $26.42 per ounce by 11:15 AM ET (16:15 GMT), down 22 cents or 0.8% on the day. The session high for was $26.71 while the peak for the year was $29.86, set in August. Jim Wyckoff, writing on the portal of bullion trader Kitco, said:
“Silver bulls’ next upside price objective is closing prices above solid technical resistance at the December high of $27.635 an ounce.”
Silver futures were down 2 cents, or 0.1%, at $26.55. The session high for was $26.87 while the peak for the year was $30.36, set in August. For the year, silver futures were up 47%.
U.S. gold futures for February delivery Comex were up $8.85, or 0.5%, at $1,902.25. The session high was $1,904.35. But the peak for the year was more than $100 higher at $2,089, set in August. For the year, gold futures were up 23%.
The spot price of gold, which algorithms and hedge funds use to ultimately decide the direction in futures, was at $1,898.51, up $3.84 or 0.2% on the day. The session high was $1,900.39 while the peak for the year was $2,073, set in August.
The Dollar Index, pitted against a basket of six major currencies, was down 0.2% at 89.85, after hitting April 2018 lows of 89.48. For the year, the index was down 6%.
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The worst year in the history of oil trading is ending with a loss of more than 20% for crude prices as the best efforts of producers to cut output still fell short of mitigating the demand destruction caused by the coronavirus pandemic.
Price Futures Group oil analyst Phil Flynn asked in his final note for the year:
“Should 2020 be forgotten and never brought to mind?”
Flynn continued:
“The year of Covid saw the global economy grind to a halt because the Covid-19 virus causes the biggest drop in global economic output since the days of the Great Depression. For oil, we saw demand drop over 8%, the biggest percentage demand drop year-over-year in history that caused billions of dollars in energy investment write-downs. as well as a wave of bankruptcies.”
New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled 2020 trading at $48.52 per barrel, down 12 cents, or 0.2%, for the day. For the year, it was off $12.54, or 21%.
WTI opened 2020 at $61.06 and reached $65.65 by the first week of January. What no one knew then was the epic crash that was to follow in April, that would send the U.S. crude benchmark to as low as minus $40 – the first ever negative pricing in oil’s history that forced those who owned crude to pay people to get the barrels off their hands.
London-traded Brent, the global benchmark for crude, officially finished 2020 at $51.80, up 46 cents, or 0.9 for the session.
Brent settled 2019 at $66 and hit a 2010 high of $71.75 by January, before plummeting to $15.98 in April. It ended the year down $14.20, or 22%.
After rallying for seven straight weeks from November on optimism over Covid-19 vaccine breakthroughs and roll-out, oil is ending the year in a trading range that capped WTI at $48 and Brent at $52 on concerns that immunization from the virus might now take a lot longer than thought.
While the rebound from crude’s lows itself was spectacular with the grit shown by producers to cut output, demand for oil in the new year is far from assured.
Despite that, come Jan. 4, the Organization of the Petroleum Exporting Countries and its allies will meet to consider raising global production of crude by half a million per day for the second time in a month.
When the 13-member Saudi-led OPEC and its 10 allies led by Russia agreed to hike output by 500,000 barrels per day the first time in December, the market actually lauded the group’s discipline for adding less than the 1.0-2.0 million bpd forecast. Crude prices actually rose after the OPEC+ maneuver.
This time around, the market might not be as kind.
To add to the consternation of traders: The request is coming from Russia, which was responsible for escalating the price crash in April by insisting on raising production just as Covid-19 lockdowns were gathering pace across the world.
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Natural Gas (Oilprice.com)
The U.S. natural gas industry seems to have a brighter future than its oil sister under a Biden administration, even though the president-elect has made a pledge to push an ambitious emissions-cutting agenda during his term, aiming for a net zero electricity sector by 2035 and net zero economy by 2050. According to industry sources, the sharp rise in investor appetite for environmental, social and governance investments will not affect the natural gas space too much, with opportunities opening up for a consolidation of the sector, Mergermarket reported for Forbes this week.
A consolidation is already underway in the oil sector, prompted by the latest news from the pandemic front, with vaccines widely seen as a solution to the demand loss problem that has made some smaller players in the field attractive for buyers.
While oil is falling out of favor fast with the new breed of environmentally conscious investors, natural gas will simply be indispensable for the observable future to provide the reliability of electricity supply that solar and wind simply cannot offer at this point.
Industry advisers point to California’s blackouts as a case in point here: the state that leads in renewable power also leads in grid unreliability. While some state administration officials have defended the shift to renewables saying it has nothing to do with the increased risk of blackouts, others have blamed the rush to go renewable for the blackouts.
Reliability of power supply is what many experts argue will ensure the long-term future of natural gas even in a world that is setting increasingly ambitious climate change fighting goals for itself. Solar and wind only produce power intermittently and they need energy storage to become as reliable as fossil fuels. However, storage technology needs to advance a lot from current levels, which can only provide storage for a couple of hours, in case of a sudden outage, for example.
Gas, on the other hand, is not intermittent and the United States has abundant supplies of it, especially in the shale plays. Thanks to forecasts for a rebound in demand for natural gas, especially overseas, producers have been ramping up their output, while still keeping a cap on oil production.
The positive sentiment on natural gas goes beyond the energy industry, too. A recent Deloitte survey revealed that most executives believed natural gas had an essential role to play in the world’s energy transition, Natural Gas Intelligence reported, noting the survey also suggested this role will be reduced or evolving as gas is pitted against renewables.
Essential it may well be but for now, natural gas is trapped between the power industry’s “decarbonization strategy of focusing on low-carbon fuels and the broader impetus to replace gas with renewables for electricity generation,” Deloitte noted in the survey.
“Other challenges include the ongoing problem of fugitive methane emissions associated with gas, as well as the growing electrification of the broader energy system.”
The methane issue has been garnering growing attention from various stakeholders and the energy industry has been doing a lot more to reduce emissions. In fact, this year U.S. oil producers managed to capture a record amount of associated gas.
The electrification issue, on the other hand, may well turn into an opportunity for more natural gas demand if renewables’ inherent disadvantages prevent them from meeting this additional demand for electricity.
Emission-cutting targets are all well and good until the actual fact that the world’s energy demand is growing sinks in. Solar and wind cannot meet this growing demand on their own for the abovementioned intermittency reason as well as because even in the Sahara, the sun does not shine 24/7 and even in the North Sea there may be windless days. Until these problems are solved, the world will continue to need fossil fuels and natural gas is the best placed among them to fit in with the transition to a less fossil-fuel intense energy sector.
By Irina Slav for Oilprice.com
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