Written by Investing.com Staff, Investing.com
U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.71%
U.S. stocks were mixed after the close on Saturday, as gains in the Consumer Services, Technology and Healthcare sectors led shares higher while losses in the Financials, Industrials and Telecoms sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.71%, while the S&P 500 index fell 0.06%, and the NASDAQ Composite index climbed 0.76%.
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The best performers of the session on the Dow Jones Industrial Average were Home Depot Inc (NYSE:HD), which rose 2.10% or 5.94 points to trade at 289.10 at the close. Meanwhile, Walmart Inc (NYSE:WMT) added 1.33% or 1.73 points to end at 131.74 and Salesforce.com Inc (NYSE:CRM) was up 1.30% or 2.72 points to 212.20 in late trade.
The worst performers of the session were Visa Inc Class A (NYSE:V), which fell 6.24% or 13.76 points to trade at 206.90 at the close. The Travelers Companies Inc (NYSE:TRV) declined 4.80% or 7.53 points to end at 149.30 and Nike Inc (NYSE:NKE) was down 3.97% or 5.68 points to 137.49.
The top performers on the S&P 500 were FedEx Corporation (NYSE:FDX) which rose 6.10% to 279.58, Occidental Petroleum Corporation (NYSE:OXY) which was up 5.56% to settle at 28.10 and Dollar General Corporation (NYSE:DG) which gained 5.02% to close at 187.78.
The worst performers were Visa Inc Class A (NYSE:V) which was down 6.24% to 206.90 in late trade, Chubb Ltd (NYSE:CB) which lost 5.29% to settle at 159.23 and The Travelers Companies Inc (NYSE:TRV) which was down 4.80% to 149.30 at the close.
The top performers on the NASDAQ Composite were Supercom Lt (NASDAQ:SPCB) which rose 54.48% to 2.2400, Clovis Oncology Inc (NASDAQ:CLVS) which was up 47.74% to settle at 7.86 and Hall of Fame Resort Entertainment Co (NASDAQ:HOFV) which gained 46.52% to close at 4.00.
The worst performers were Idera Pharmaceuticals Inc (NASDAQ:IDRA) which was down 62.00% to 1.980 in late trade, Nuzee Inc (NASDAQ:NUZE) which lost 21.37% to settle at 4.01 and Wisekey International Holding AG (NASDAQ:WKEY) which was down 17.48% to 10.81 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 0 to 0; on the Nasdaq Stock Exchange, 0 fell and 0 advanced.
Shares in Nuzee Inc (NASDAQ:NUZE) fell to 52-week lows; down 21.37% or 1.09 to 4.01.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 2.92% to 20.95.
Gold Futures for April delivery was up 0.66% or 11.40 to $1743.90 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in April rose 2.43% or 1.46 to hit $61.46 a barrel, while the May Brent oil contract rose 2.01% or 1.27 to trade at $64.55 a barrel.
EUR/USD was down 0.09% to 1.1904, while USD/JPY unchanged 0.00% to 108.88.
The US Dollar Index Futures was up 0.10% at 91.958.
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The dollar edged lower in early European trading Friday, but remains at elevated levels, supported by higher Treasury yields following the Federal Reserve’s dovish stance.
At 3:50 AM ET (0750 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 91.710, following a 0.5% jump Thursday, the most in two weeks.
USD/JPY was down 0.1% at 108.81, falling slightly after the Bank of Japan widened its target band for the benchmark 10-year yield by an implicit 5 basis points. The move that had been trailed in the press and BoJ Governor Haruhiko Kuroda downplayed suggestions that it was tightening its policy.
GBP/USD rose 0.2% to 1.3951, after weakening 0.3% a day earlier on concerns that the U.K.’s vaccination campaign is set to slow. The Bank of England maintained its easy policy stance at its meeting on Thursday and warned the outlook for Britain’s recovery remained unclear.
EUR/USD rose 0.1% to 1.1930 after falling around 0.5% Thursday as a third wave of Covid-19 cases hit large parts of Europe, while the risk-sensitive AUD/USD climbed 0.1% to 0.7762.
Federal Reserve Chairman Jerome Powell made it clear earlier this week that the central bank will maintain its stance of aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary even though the Fed is projecting the strongest U.S economic growth in nearly 40 years.
This resulted in the benchmark U.S. 10-year yield climbing over 1.75% overnight, its highest level since January 2020, before easing below 1.70% in early European trading.
“The Fed keeps repeating that inflation will be allowed to overshoot and that they need to see the inflation first before anything related to tightening can be just barely considered,” said analysts at Nordea, in a research note.
“This will, in our view, allow USD bond yields and inflation expectations to continue to increase during Q2 (potentially a lot).”
Looking at the emerging markets, USD/RUB fell 0.3% to 74.115 with Russia’s central bank meeting later Friday. It’s expected to keep interest rates on hold at 4.25%, but pressure is building on the central bank to tighten policy as soaring food prices and a sanctions-weakened currency have driven inflation to the fastest pace in four years. Brazil and Turkey, two of the world’s biggest emerging markets, both hiked rates by more than expected earlier this week to rein in inflation.
USD/TRY fell 0.4% to 7.2904, meaning that the lira has gained over 3.5% against the dollar this week.
“The Turkish central bank made an aggressive 200bp adjustment to the policy rate on the back of deteriorating global risk appetite, an uptrend in commodity prices and a weakening lira, adding to elevated inflation risks,” said ING analysts, in a research note.
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Gold logged a second-straight weekly gain, indicating that investors in the yellow metal were getting adjusted to a rising dollar and spiking U.S. bond yields as the “new normal” they had to navigate in a higher inflation environment.
Gold for April delivery settled up $9.20, or 0.5%, at $1,741.70 an ounce on New York’s Comex.
For the week, the benchmark futures gold contract was up 1.3%, extending a similar gain from the previous week.
Gold rose on the week despite yields benchmarked to the 10-year Treasury note hitting a 13-month high above 1.7% on Thursday and the Dollar Index soaring to the key 92 level on Friday – developments that were negative to the yellow metal.
“The next few months will be very tricky in identifying what will be the primary catalysts for bullion investors,” said Ed Moya, analyst at New York’s OANDA. “Wall Street will remain fixated on the bond market selloff and recent disdain for technology stocks.”
Moya said gold was beginning to gain some investor attention because rising Treasury yields will eventually be countered by action from the Federal Reserve. “The S&P 500 index won’t be able to climb higher if mega-cap tech stocks don’t get their groove back and any hesitancy in that trade should trigger some safe-haven flows into gold.”
Investor uncertainty grew this week after Fed Chairman Jay Powell in his monthly news conference on Wednesday declined to give any hint of the central bank buying more bonds than previously. Surging yields since the start of the year have been limiting the rally in risk assets.
Powell said the U.S. jobless rate will likely continue declining from February’s 6.2% while inflation expands 2.4% this year against expected overall GDP growth of 6.5% in an economy rebounding from a pandemic-stricken 2020. But these still weren’t enough to raise interest rates, the Fed Chair said.
Surging bond yields have been an anathema to gold, forcing the yellow metal to lose 17% from record highs of nearly $2,100 in August. Any indications by the Fed that it will intensify bond buying in the coming months could just be the thing to clamp down on surging yields and spark a rally in gold.
For decades, gold was touted as the best store of value whenever there were worries about inflation. Yet, in recent months, it was deliberately prevented from being the go-to asset for investors as Wall Street banks, hedge funds and other actors shorted the metal while pushing up U.S. bond yields and the dollar instead.
Bond yields have surged on the argument that economic recovery in the coming months could extend beyond Fed expectations, leading to spiraling inflation, as the central bank insists on keeping interest rates at near zero.
The dollar, which typically falls in an environment of heightened inflation fears, also rallied instead on the same runaway economic recovery logic. The greenback’s status as a reserve currency has bolstered its standing as a safe haven, leading to new long positions being built in the dollar. That had further capped any rebound in gold prices.
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Crude prices rebounded meaningfully on Friday from the previous session’s plunge, helped by weaker bond yields, the dollar’s retreat from its highs and buying of oil on-the-dips.
But a loss of nearly 7% on the week shattered the myth of oil’s indestructible rally since October, indicating more downside and higher volatility going forth.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled the day’s trade up $1.42, or 2.4%, at $61.42, retracing part of Thursday’s 7.1% drop.
London-traded Brent, the global benchmark for crude, finished Friday’s trade up $1.25, or 2%, at $64.53, after the previous session drop of 7%.
But for the week, WTI fell 6.4% while Brent lost 6.8%.
It was the biggest slump for both benchmarks since the week ended Oct. 23.
In the past almost five months, crude prices had mostly gone in one direction – up – after riding on OPEC+ production cuts, falling crude inventories in developed countries and the promise of economic reopenings from COVID-19. From around $36 per barrel at the end October, WTI shot up to almost $68 last week.
What was almost completely overlooked was the anemic demand for jet and other transportation fuels as global travel remained heavily curtailed by the pandemic.
Europe’s constant struggle with new outbreaks of infections, alarmingly slow pace of vaccinations and new lockdowns were also treated with little seriousness – until Thursday’s plunge.
While the sell-off in the previous session appeared overdone from a perfect storm of negativity – that included bond yields ramping to 13-month highs of 1.7% and a Dollar Index nearing 92 – it proved that it can happen again.
“The magic of the so-called one-way trade has been broken,” said John Kilduff, founding partner at Again Capital, a New York-based energy hedge fund. “There’s a reset now of expectations, and that below $60 WTI is possible again if the market gets ahead of itself, without supportive data.”
Helping oil’s upside on Friday was a slide in bond yields and the dollar’s retreat from session highs, along with the United States administering its 100 millionth COVID-19 vaccine and the approval given by Europe’s medicines regulator to the Oxford-AstraZeneca dose that at least a dozen countries on the bloc had stopped using out of safety concerns.
But working against those positives was a third wave of infections in Europe and increasing lockdowns in places like Italy.
The oncoming of U.S. refinery maintenance season that could raise crude stockpiles in the country and the possibility of higher crude production out of Libya and a still-sanctioned Iran could also offset some of the bullish sentiment delivered for months by OPEC+ cuts.
Technical charts also indicated there could more volatility ahead.
“Further upside for WTI is subject to it reaching $63.10,” said Sunil Kumar Dixit of SK Dixit Charting in Kolkata, India. “Failure to do could open it to the risk of a bottom below the recent $58.23.”
See also:
- The Oil Price Rally Is Officially Over (Oilprice.com)
Natural Gas (Hellenic Shipping News)
Analysts call for another below-average storage withdrawal to US gas stocks, and a rare seasonal net injection is possible in the weeks ahead as the February deep freeze fades into memory for markets.
The US Energy Information Administration is expected to report a 17 Bcf withdrawal for the week ended March 12, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a four Bcf to a 30 Bcf withdrawal. The EIA releases its next weekly storage report on March 18 at 10:30 am ET.
US fundamentals have begun to slide into shoulder season. Industrial demand along the US Gulf Coast was already weakened as a result of petrochemical outages while warmer-than-normal temperatures cut another 5 Bcf/d from residential and commercial demand estimates week over week, according to S&P Global Platts Analytics.
The US as a whole warmed 2 degrees Fahrenheit, averaging 3 degrees warmer than normal, with the largest gains in the Midwest, further supported by a few degrees of warming in the South Central and Mountain regions. Despite the warmer weather, there was no offsetting gain in power burn, which declined by roughly 1.6 Bcf/d during the week ended March 12.
A 17 Bcf draw would be more than the 15 Bcf withdrawal reported in the corresponding week last year, but well below the five-year average draw of 59 Bcf. A withdrawal within expectations would decrease stocks to 1.776 Tcf. The deficit to the five-year average would decrease to 99 Bcf, and the deficit to 2020 would tick up to 259 Bcf.
The mid-February cold front that shattered records across the US may have been a month ago – ancient history for the market – but the long tail of recovery is still playing an important role in balances. South Central region salt dome inventories began February right around the five-year average, but after reporting the largest draw in the EIA’s historical data, the salts began to carve out a new five-year minimum.
Sample activity over the last two weeks has demonstrated how flexible the salt facilities are, with activity turning to a net injection of 12 Bcf last week, and another 15 Bcf, for the week ended March 12, according to Platts Analytics. In terms of supply, after briefly touching 33 Bcf/d last week, Northeast production estimates dipped by 300 MMcf/d , averaging 32.9 Bcf/d.
Apart from the seasonal declines, demand did receive continued baseload support from LNG exports, which increased 500 MMcf/d, approaching the 11 Bcf/d highs seen in early February, according to Platts Analytics.
The NYMEX Henry Hub April contract added 5 cents to $2.53/MMBtu during trading on March 16, which was 12 cents lower than one week prior. Henry Hub spot priced at $2.52/MMBtu, which is where it has hovered since Feb. 22 following the winter storm.
Platts Analytics’ supply and demand model expects a 25 Bcf draw for the week ending March 19, which would measure less than half the five-year average. An early view at the week ending March 26 shows the possibility of a net injection. The first net addition to storage typically occurs in the week ending April 2.
Source: Platts
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