A rocky Friday trading session ended with mixed results for American equities as the Dow fell, the S&P 500 was flat, and the Nasdaq surged ahead. Commodity markets finally fell back down to earth as gold tumbled by $9/oz. and oil fell by 1.5% on the day. Meanwhile, the dollar managed to firm up in Friday trading as the greenback gained against most of the world’s major currencies helping to push the dollar index just shy of the 77 mark. This helped to send some sectors of the agricultural market back down; sugar prices fell by over 3% and were followed by similar losses in the cotton and cocoa markets as well. Investors did however scoop up shorter term bonds which saw their yields plummet despite a move out of longer-term issues by many investors.
Today’s session was influenced by a weak showing out of key market component General Electric (GE) which reported earnings earlier today. GE posted profits of 18 cents a share on weak revenues which helped the company to fall short of its 23 cents a share in profits last quarter. This bearish report helped to send the shares of the conglomerate down more than 5% on the day, one of the biggest losers in DJIA. Another cause of the weakness in the Dow was the ongoing foreclosure crisis which has dragged down the entire large-cap financial sector. Some analysts are growing increasingly worried that the banks may be forced to buy back large chunks of their portfolios due to improper documentation and outright fraud in some cases. “The risk is if there’s wrongdoing or things were wrong, they may be responsible for buying back some of these mortgages which would put pressure on their earnings,” said David Bellantonio, head of U.S. trading at Instinet. “The weakness in the banks is keeping pressure on the market.”
One of the biggest winners in the ETFdb 60 was the PowerShares QQQ Trust (QQQQ) which rose by 2.1% in today’s trading. This popular fund was buoyed by strong performances out of Apple which makes up nearly one-fifth of the fund and rose by 4.1% on the day, and an 11.2% gain for top five component Google (GOOG). Google’s stock surged more than $60 a share helping to propel the company back above the $600/share mark thanks to better than expected quarterly earnings and good news about the company’s YouTube division which seems poised to generate more than $2.5 billion in annual revenues from display ads on the site [see holdings of QQQQ here].
One of the biggest losers on the day was the United States Natural Gas Fund (UNG) which tumbled by 2.7% to close out the week. Today’s sharp drop came as natural gas futures fell to a fresh one year low thanks to robust supplies and limited demand across much of the country which is experiencing mild weather. Inventory levels now stand at 3.59 tcf, 7.4% above the five-year average suggesting that if a demand spike hits there are ample supplies to hold over markets. “While natural gas often makes a seasonal push to the upside as heating demand begins to pick up, we think the expanding storage surplus is a near-term counterbalance to that tendency,” said Tim Evans, an analyst with Citi Futures Perspective, in a client note. “We’d wait for a forecast for colder than normal temperatures” before betting on price increases in gas [see charts of UNG here].
Disclosure: No positions at time of writing.