Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.54%
U.S. stocks were lower after the close on Friday, as losses in the Oil & Gas, Technology and Basic Materials sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average fell 0.54%, while the S&P 500 index declined 0.72%, and the NASDAQ Composite index lost 0.85%.
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The best performers of the session on the Dow Jones Industrial Average were Amgen Inc (NASDAQ:AMGN), which rose 2.12% or 4.98 points to trade at 239.69 at the close. Meanwhile, Merck & Company Inc (NYSE:MRK) added 1.11% or 0.82 points to end at 74.50 and Verizon Communications Inc (NYSE:VZ) was up 0.87% or 0.50 points to 57.82 in late trade.
The worst performers of the session were Chevron Corp (NYSE:CVX), which fell 3.60% or 3.85 points to trade at 103.05 at the close. Dow Inc (NYSE:DOW) declined 2.48% or 1.59 points to end at 62.47 and Salesforce.com Inc (NYSE:CRM) was down 1.78% or 4.17 points to 230.19.
The top performers on the S&P 500 were Aon PLC (NYSE:AON) which rose 5.20% to 251.18, Tesla Inc (NASDAQ:TSLA) which was up 4.85% to settle at 709.84 and Fortinet Inc (NASDAQ:FTNT) which gained 4.53% to close at 204.33.
The worst performers were Twitter Inc (NYSE:TWTR) which was down 15.18% to 55.21 in late trade, ResMed Inc (NYSE:RMD) which lost 9.56% to settle at 188.03 and Helmerich and Payne Inc (NYSE:HP) which was down 8.85% to 25.63 at the close.
The top performers on the NASDAQ Composite were Image Sensing Systems Inc (NASDAQ:ISNS) which rose 39.35% to 6.42, Motus GI Holdings Inc (NASDAQ:MOTS) which was up 28.44% to settle at 1.400 and Farmmi Inc (NASDAQ:FAMI) which gained 23.97% to close at 0.4438.
The worst performers were Keros Therapeutics Inc (NASDAQ:KROS) which was down 16.63% to 58.45 in late trade, Casa Systems Inc (NASDAQ:CASA) which lost 15.95% to settle at 7.85 and Microvision Inc (NASDAQ:MVIS) which was down 15.33% to 15.2400 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2131 to 908 and 90 ended unchanged; on the Nasdaq Stock Exchange, 2196 fell and 994 advanced, while 92 ended unchanged.
Shares in Aon PLC (NYSE:AON) rose to all time highs; gaining 5.20% or 12.42 to 251.18. Shares in Image Sensing Systems Inc (NASDAQ:ISNS) rose to 5-year highs; gaining 39.35% or 1.81 to 6.42.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 5.68% to 18.61.
Gold Futures for June delivery was down 0.02% or 0.30 to $1768.00 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in June fell 2.32% or 1.51 to hit $63.50 a barrel, while the July Brent oil contract fell 2.03% or 1.38 to trade at $66.67 a barrel.
EUR/USD was down 0.77% to 1.2025, while USD/JPY rose 0.35% to 109.30.
The US Dollar Index Futures was up 0.72% at 91.248.
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The dollar edged higher Friday, but remains near multi-week lows and was set for a fourth consecutive week of losses with the U.S. Federal Reserve retaining its dovish monetary policy even as the economy recovers.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.648, trading around levels last seen in late February.
The index is on course to end the week 0.2% lower, bringing its losses for April to 2.8%. A four-week losing streak would be the longest since the six-week slide to the end of July. In part that’s because of the gains of commodity currencies, amid surging prices for both industrial and agricultural products. The dollar’s biggest losses this week have been against the Canadian and New Zealand dollars.
EUR/USD traded down 0.1% at 1.2113, near the two-month high of 1.2150 set the previous session. GBP/USD was flat at 1.3942, USD/JPY fell 0.1% to 108.77, just off the two-week high of 109.22 from Thursday. The risk-sensitive AUD/USD rose 0.2% to 0.7779, climbing back toward the six-week high of 0.7818 seen on Thursday.
This dollar weakness was helped by the decision of the Federal Reserve to leave its ultra easy monetary policies in place even while it acknowledged that there had been an improvement in the economic conditions, as typified by first-quarter GDP growth of 6.4%, released Thursday.
“With front-end U.S. real rates already deeply negative and set to fall further as U.S. CPI rises sharply this quarter, this is likely to be a USD negative, particularly when other parts of the world (namely Europe) are set to see an economic rebound in coming months,” said ING analysts, in a note.
Evidence of that coming rebound in Europe came with the release of the first-quarter French GDP figure earlier Friday, with output in the euro area’s second-largest economy growing 0.4% in the three months through March.
Elsewhere, USD/CNY was largely flat at 6.4706 despite China’s manufacturing activity accelerating at a slower-than-expected pace in April, with said the country’s manufacturing Purchasing Managers’ Index coming in at 51.1, lower than March’s 51.9 reading.
Staying in Asia, USD/KRW rose 0.4% to 1,111.85 after South Korea’s industrial output fell 0.8% on the month in March, shy of expectations for an increase of 0.1%.
Additionally, USD/TRY dropped 0.1% to 8.2093 after Turkey’s central bank raised its year-end inflation forecast on Thursday to 12.2% from 9.4%, and its new governor said tight policy would be maintained until price pressures decline.
“While the Central Bank of Turkey sees the inflation rate peaking in April, the trajectory is relatively optimistic compared to current market expectations,” added ING.
Gold cannot catch a break for too long, it appears, from its nemesis – the 10-year U.S. Treasury yield.
Gold was down for a fourth day in a row Friday as intermittent spikes in the key yield of U.S. bonds kept it under constant pressure.
“While the global market is readying for an inflation overshoot, gold is underperforming,” TD Securities said in a note. “Institutional outflows continue to weigh on the yellow metal as nominal rates increasingly discount the singular reflation trade’s impact.”
Benchmark gold futures on New York’s Comex were down $1.35, or 0.1%, at $1,766.95 an ounce by 1:25 PM ET (17:25 GMT). For the week, the decline was 0.6%, extending the previous week’s drop of 0.1%.
The yield on the 10-year Treasury note hit a two-week high of 1.684 on Thursday as bonds started selling off again this week after a spike in U.S. consumer confidence, which hit 14-month highs in April.
Aside from consumer spending, a rash of US economic data, from inflation to homebuilding, house prices and employment, have exceeded forecasts lately, boosting hopes for faster-than-expected recovery from the coronavirus pandemic.
These have boosted prices of stocks and inflation-sensitive commodities like oil, copper, lumber, soybeans and even coffee.
But gold, supposedly the world’s No. 1 inflation-hedge and the “safe haven” everyone turns to in moments of financial and political trouble – has performed miserably for months on end.
Since the year began, gold has faced continuous headwinds as the dollar and bond yields often surged on the argument that U.S. economic recovery from the pandemic could exceed expectations, leading to fears of spiraling inflation as the Federal Reserve kept interest rates at near zero.
Gold had a scorching run in mid-2020, when it rose from March lows of under $1,500 to reach record highs of nearly $2,100 by August, responding to inflationary concerns sparked by the first U.S. fiscal relief of $3 trillion approved for the coronavirus pandemic.
Breakthroughs in vaccine development since November, along with optimism over the economic recovery, however, forced gold to close 2020 trading at just below $1,900.
This year, the rut worsened as gold fell first to $1,800 levels in January, then collapsed to below $1,660 at one point in March.
Such weakness in gold is remarkable if considered from the perspective of the Covid-19 stimulus of $1.9 trillion passed by Congress in March, and the Biden administration’s plans for an additional infrastructure spending of $2.2 trillion.
Typically, stimulus measures lead to dollar debasement and inflation that sends gold rallying as an inflation hedge. But logic-suspending selloffs instead took place in gold over the past six months.
Over the past two weeks, gold has repeatedly failed to cross the $1,800 resistance, despite coming within a hair’s breadth of the test.
TD Securities said in its note Friday that “the changing composition of gold speculators argues that discretionary capital may again be flowing into gold, capturing market share from trend-followers”, including Commodity Trading Advisors (CTAs) made up of hedge funds.
“This has important implications for future price action, as CTA trend follower short positioning continues to grow, stretching an elastic band which can make for a more powerful breakout should prices rally,” TD Securities said.
Maybe, but that sounds like wishful thinking for now.
India matters, whether OPEC+ likes it or not.
Oil’s three-day rally came to an end on Friday as globally-televised images of an India literally on fire from Covid – with thousands killed from the virus cremated in open spaces – sent a chill across crude markets, which count on demand from the nation of 1.4 billion people.
States and cities in most parts of India, including capital New Delhi and financial hub Mumbai, went into lockdown and curfew, although a national shutdown had not been called. India is the world’s third-biggest oil importer, and the restrictions on its economy have raised expectations that Prime Minister Narendra Modi’s government will need to raise more funds for stimulus, with the country already in deficit of an estimated 188 billion rupees ($2.5 billion) just one month into its current fiscal year.
For days, oil markets have tried to ignore India’s Covid catastrophe, which has logged nearly 18 million infections, or more than half of the U.S. tally of 32 million. Crude prices rose without stop between Tuesday and Thursday on optimism over demand growth for this year projected by producers’ cartel OPEC+ and bullish U.S. oil inventory numbers and economic data.
But on Friday, the rally snapped on news of the growing lockdowns in India, as well as in Brazil, another major emerging market economy for oil. Weak U.S. stock markets added to the negative mood.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, was down $1.67, or 2.6%, to $63.34 per barrel by 12:00 PM ET (16:00 GMT). WTI had hit a six-week high of $65.46 earlier in the week.
London-traded Brent, the global benchmark for crude, fell $1.52, or 2.2%, to $66.53. Brent soared to $68.43 earlier this week.
WTI remained up about 2% on the week while Brent showed a weekly gain of almost 1%, as the gains in recent days were higher than Friday’s slide.
“The Covid crisis in India, the world’s third-largest importer of oil, continues to escalate and, in fact, shows no signs of abating,” said Sophie Griffiths, head of research for U.K. and EMEA at online trading platform OANDA.
“With daily cases continuing to reach new records day after day, the peak clearly hasn’t been reached yet. With ongoing lockdowns and threats of new variants, the dire Covid situation in India is the dominant headwind risk to oil currently.”
Rystad Energy warned on Wednesday that India’s Covid crisis could slash an extra 575,000 barrels per day of oil liquids demand in April and 915,000 bpd in May 2021, disturbing the almost-balanced global oil market and building a sizable glut.
A joint-technical committee meeting of oil producers from the OPEC+ cartel just concluded on Monday it might be able to clear by the end of the second quarter a year-long glut in oil triggered by the pandemic.
OPEC+, which held back at least 7 million barrels of daily supply from the market since April 2020, will be pumping more oil from next month. It plans to add 350,000 barrels per day in May and June, and a further 400,000 barrels daily in July.
- Oil Gains on U.S. Data Octane (Thursday)
Natural Gas Prices Jump On Smaller-Than-Expected U.S. Inventory Build
The U.S. benchmark natural gas price reversed losses from earlier on Thursday and turned higher after the Energy Information Administration reported a smaller-than-forecast injection into storage.
As of 11:30 a.m. on Thursday, the price of natural gas at Henry Hub was up by 2.34 percent at $2.754/ MMBtu. At the start of trading on Thursday, the price was at $2.688/ MMBtu, down from Wednesday’s close at $2.776/ MMBtu.
The EIA’s weekly natural gas storage report showed today that working gas in storage was 1,883 billion cubic feet (Bcf) at the end of the week to April 16. This represents a net increase of 38 Bcf from the previous week.
A Reuters poll had expected an injection of 49 bcf for the week to April 16, which would have been higher than normal.
The actual EIA estimate, however, came in very close to the five-year (2016-2020) average injection of 37 bcf.
As per the EIA data, natural gas stocks in the United States at the end of the week to April 16 were 251 Bcf less than last year at this time and 12 Bcf above the five-year average of 1,871 Bcf.
At 1,883 Bcf, total working gas is within the five-year historical range.
Natural gas prices were also up on Thursday amid continued record exports of pipeline gas and liquefied natural gas (LNG) out of America, as well as cooler weather forecasts for the coming days, which is expected to drive heating demand higher.
“A strong late season cold shot continues to impact the eastern 2/3 of the country with rain, snow, and chilly lows of 20s to 40s for strong national demand, coldest over the N. Plains/Midwest, and interior Northeast,” Natgasweather.com said on Thursday. Overall, demand for heating is expected to be high through Sunday-Monday, and turn low after that.
By Tsvetana Paraskova for Oilprice.com
Gold Down, as Mixed Economic Data Takes Shine off Yellow Metal
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