Written by Investing.com Staff, Investing.com
U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.06%
U.S. stocks were mixed after the close on Friday, as gains in the Consumer Goods, Utilities and Technology sectors led shares higher while losses in the Telecoms, Basic Materials and Industrials sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.06%, while the S&P 500 index added 0.26%, and the NASDAQ Composite index gained 0.61%.
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The best performers of the session on the Dow Jones Industrial Average were Coca-Cola Co (NYSE:KO), which rose 1.88% or 0.94 points to trade at 50.90 at the close. Meanwhile, McDonald’s Corporation (NYSE:MCD) added 1.71% or 3.62 points to end at 215.60 and Amgen Inc (NASDAQ:AMGN) was up 1.61% or 3.76 points to 237.78 in late trade.
The worst performers of the session were 3M Company (NYSE:MMM), which fell 2.14% or 3.62 points to trade at 166.09 at the close. Intel Corporation (NASDAQ:INTC) declined 1.69% or 0.88 points to end at 51.31 and Verizon Communications Inc (NYSE:VZ) was down 1.34% or 0.79 points to 57.74.
The top performers on the S&P 500 were TripAdvisor Inc (NASDAQ:TRIP) which rose 9.85% to 35.12, Tesla Inc (NASDAQ:TSLA) which was up 5.85% to settle at 863.81 and F5 Networks Inc (NASDAQ:FFIV) which gained 5.48% to close at 189.97.
The worst performers were Western Digital Corporation (NASDAQ:WDC) which was down 5.08% to 51.96 in late trade, Alliance Data Systems Corp (NYSE:ADS) which lost 4.90% to settle at 74.48 and Avery Dennison Corp (NYSE:AVY) which was down 4.05% to 156.38 at the close.
The top performers on the NASDAQ Composite were LM Funding America Inc (NASDAQ:LMFA) which rose 158.81% to 1.9900, Applied DNA Sciences Inc (NASDAQ:APDN) which was up 85.21% to settle at 10.52 and Polarityte Inc (NASDAQ:PTE) which gained 66.95% to close at 1.28.
The worst performers were Sarepta Therapeutics Inc (NASDAQ:SRPT) which was down 51.16% to 82.51 in late trade, The9 Ltd ADR (NASDAQ:NCTY) which lost 25.56% to settle at 12.730 and Castor Maritime Inc (NASDAQ:CTRM) which was down 21.78% to 0.187 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1718 to 1349 and 95 ended unchanged; on the Nasdaq Stock Exchange, 1698 fell and 1351 advanced, while 59 ended unchanged.
Shares in TripAdvisor Inc (NASDAQ:TRIP) rose to 52-week highs; up 9.85% or 3.15 to 35.12. Shares in Tesla Inc (NASDAQ:TSLA) rose to all time highs; gaining 5.85% or 47.77 to 863.81. Shares in F5 Networks Inc (NASDAQ:FFIV) rose to 52-week highs; gaining 5.48% or 9.87 to 189.97.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 2.32% to 21.85.
Gold Futures for February delivery was down 3.56% or 68.10 to $1845.50 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in February rose 3.05% or 1.55 to hit $52.38 a barrel, while the March Brent oil contract rose 3.02% or 1.64 to trade at $56.02 a barrel.
EUR/USD was down 0.43% to 1.2217, while USD/JPY rose 0.14% to 103.94.
The US Dollar Index Futures was up 0.30% at 90.060.
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The dollar edged higher Friday, halting its recent downtrend as Treasury yields pushed higher. However, moves are small ahead of the release of the latest U.S. employment data.
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 89.812, bouncing off a near three-year low following a slide of nearly 7% in 2020.
USD/JPY was up 0.1% at 103.90, EUR/USD fell 0.1% to 1.2262, after earlier reaching an almost three-year high of 1.2346. GBP/USD climbed 0.1% to 1.3579, while the risk-sensitive AUD/USD was up 0.2% at 0.7783.
The greenback has been on the slide for months, with the central drivers being hopes of a global recovery, backed by the introduction of Covid-19 vaccines, backed by deeply negative U.S. real rates.
Adding to this overall trend this week has been the Democrats winning effective control of the Senate, giving President-elect Joe Biden scope to push through more spending.
That said, this trend has taken a breather Friday with the benchmark 10-year Treasury yield topping 1% earlier this week for the first time since March amid the political turmoil in Washington DC.
That said, “expectations that the vaccine rollout will allow economies to reopen in the second quarter of the year should mean that if we do see any corrections in the dollar trend, they will be reasonably shallow,” said ING analyst Chris Turner, in a research note.
“We now expect EUR/USD and USD/JPY to be ending the year closer to 1.30 and 100, respectively.”
Trading ranges have been narrow Friday ahead of the much-watched monthly nonfarm payroll report, with traders looking for clues on whether significantly more stimulus will be needed to keep the jobs recovery alive.
The December figure is expected to show a gain of 71,000 jobs, at 8:30 AM ET (12:30 GMT), which would be far lower than the 245,000 jobs added in November. Earlier this week, a payroll report by ADP said private businesses cut 123,000 jobs in December, far worse than economists’ had expected.
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The expectation was that 2021 would be a brilliant year for gold. While it may still turn out to be so, the first week of the year is proving excruciating for longs in the yellow metal, stunned by their worst weekly loss since November.
Both futures and the spot price of gold, which reflects real-time trades in bullion, lost more than $65 an ounce on the week, or over 3%.
The plunge came as investors pulled money from the haven to plow into U.S. Treasury yields, which surged to March highs. That threw a lifeline to the battered Dollar Index – the contrarian trade to gold – which rose above the key 90-level.
Some exited gold to chase record highs in bitcoin – which has become a growing darling of speculators all over, drawing as much mania as Tesla (NASDAQ:TSLA) shares on Nasdaq. Craig Erlam, analyst at online broker OANDA, said:
“The institutional interest for bitcoin is starting to really hurt the long-term outlook for gold. The bitcoin bubble will pop at some point over the next few months if not sooner, but until then gold is losing the backbone of big-money interest.”
Gold for February delivery on New York’s Comex settled at $1,835.40 an ounce, down $78.20, or 4.3% on the day. A week ago, February gold hovered at $1,901.60. The drop on the week was the most for gold since the week ended Nov. 7 when Pfizer (NYSE:PFE) announced the 95% efficacy in its Covid-19 vaccines that suddenly became a game changer in fighting the pandemic.
This week’s meltdown was even more unusual given that it came as the monthly U.S. employment report showed a loss of 140,000 jobs in December – the first negative growth of its kind since April. Typically, when jobs reports are bad, gold acts as a safe-haven.
This time, however, the narrative was different – even ludicrous – for the believers in gold.
The story on Friday was that with all three legislative houses – i.e. the White House, the House of Representatives and the Senate – coming under his Democratic Party’s control, President-elect Joe Biden will have “stability” of rule that dilutes the need to take cover in safe assets like gold.
Never mind that the incoming president has hinted that his first order of business might be issuing checks of $2,000 for each American hurt by the coronavirus pandemic.
Biden has also said he plans to push out at least two more comprehensive stimulus packages that could add trillions to the U.S. federal debt, already estimated at $3.8 billion for 2020.
In ordinary times, the combined impact of such spending on the dollar logically makes gold a natural hedge.
But these are extraordinary times when logic gets tossed out of the window. Treasury yields jumped 3% on the day and 21% on the week – the most since the week ended Aug 7, when a similar rally in bonds killed gold’s $2,000 plus rally. The yellow metal has never regained its glory since tumbling from the record high of nearly $2,090 that week.
Erlam of OANDA added:
“There’s speculation that ETF investors are about to abandon the safe-haven trade since the U.S. political situation will see stability with President-elect Biden and as the U.S. begins to speed up their vaccine rollout. Someone big or a hedge fund is abandoning their bet on bullion and that could reverberate further.”
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Oil has started the year with a boom, ending the first week with a gain of nearly 8%, as OPEC kingpin Saudi Arabia continued with its lower-for-longer supply strategy.
Since the Kingdom’s Tuesday announcement that it will cut an additional million barrels per day from its production in February and March, the oil market’s attention has been almost entirely on the potential for reduced global supplies.
Lost, or rather overlooked, was the question about the weakening demand for fuels in America, particularly with gasoline demand falling to its lowest since the start of the pandemic and inventories of diesel-led distillates piling up too.
Helping oil bulls, however, was an oversized final U.S. weekly crude draw for last year that came in at 8 million barrels – more than three times the level forecast – due to destocking by those unwilling to be taxed on those barrels and a pick up in U.S. oil shipments to China.
Further boost to crude prices came from the annual rebalancing by commodity funds to match the requirement of indexes they are benchmarked against – an exercise that began Friday and could result in the purchase of some $9 billion of oil contracts over the next week.
Still, analysts expect the market to turn back to fuel demand issues in the coming weeks, and also to how well the U.S. and the rest of the world are coping in their recovery from the Covid-19. Scott Shelton, analyst at ICAP (LON:NXGN) in Durham, North Carolina, said:
“If you told me you wanted to buy crude today because of the commodity rally we are seeing, or the USD weakness, or inflation fears as the 10-year bond rate is going up every day, I would encourage you.”
“If you told me that you wanted to buy oil because the market is about to see 150,000 contracts of buying? I would cringe at the concept on the basis of past history of trading rebalances.” (referring to the index rebalancing exercise.)
New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled Friday’s official session up $1.41, or 2.8%, at $52.24 per barrel. For the week, WTI rose $4.62, or nearly 7.7%, for the biggest weekly gain since November.
London-traded Brent, the global benchmark for crude, gained $1.61, or 3%, to finish Friday’s official trade at $55.99. For the week, Brent rose $4.19 or 8%.
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Milder weather and decreased demand resulted in U.S. natural gas spot prices averaging in 2020 the lowest in decades, since at least 1997, data from the Energy Information Administration (EIA) showed on Thursday.
Early in 2020, demand for heating was lower than usual due to milder winter weather, while declining demand with lower economic activity during the pandemic dragged down consumption, production, and spot prices of natural gas for the remainder of the year.
The average spot price of natural gas at the Henry Hub, the U.S. benchmark was $2.05 per million British thermal units (MMBtu) in 2020.
The spot price hit record lows in the first half of 2020 due to mild winter early in the year and depressed demand later on with the pandemic. The average monthly Henry Hub spot price in the first six months of 2020 was $1.81/MMBtu. Monthly prices reached as low as $1.63 per MMBtu in June, the lowest monthly inflation-adjusted price since at least 1989, according to EIA estimates. The monthly average Henry Hub price was less than $2/MMBtu in each month from February through June. Before 2020, the Henry Hub price had averaged less than $2/MMBtu in just one month – March 2016, the EIA said last summer.
At the start of 2021, natural gas prices jumped by 3.5 percent on Monday due to expectations of colder weather and projected higher demand for heating.
Gas demand for the week January 6 through 12 is expected to be low, according to NatGasWeather, with demand seen rising over the weekend, but lighter again around the middle of next week as much of the US warms back above normal.
The U.S. benchmark prices, however, are much lower than the price of liquefied natural gas (LNG) in Asia, which has recently jumped to a six-year high. The high LNG prices are expected to incentivize increased U.S. exports of LNG in the coming weeks and months.
By Tsvetana Paraskova for Oilprice.com
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