American markets closed a very solid week on a high note as quality earnings helped to boost stocks in Friday trading. The Dow finished the day higher by about 1.5% while the broader indexes added ever more impressive gains as the S&P 500 rose by 1.7% and the Nasdaq gained 1.8% for the session. For winning sectors, energy and tech were the big gainers while pockets of the services and financial sector also outerperformed on the day. In terms of laggards, no one sector really stood out but consumer goods and some big health care names certainly finished below the market averages. Commodity markets also saw inflows in the session as gold added about 0.8% and oil surged $3.05/bbl. to finish just under the $87.30 mark in Friday trading. Beyond the headline commodities, copper added about 3.8% while ag products also saw continued gains as hogs rose 2.2% and softs added a few percentage points across the board as well.
Currency trading saw more outflows from the dollar as the U.S. dollar index fell by about $0.5 on the day to finish just above the $76.6 level. The euro continued to gain against the dollar, today rising by close to one cent, while the pound also strengthened as well against the American currency. With that being said, the dollar did manage to finally show some strength against the yen, pushing the value of a dollar up to 77.23 yen in Friday trading. Given the solid performance of the equity markets and the mixed performance in currencies of the dollar, Treasury trading was also mixed on the day. Yields went up by six basis points in the ten year but declined by one point in the two year, leaving these two benchmarks yielding, respectively, 2.25% and 0.27% to end the week.
One of the biggest ETF winners on the day was the United States natural Gas Fund (UNG) which rose by 4.2% to close out the week. Today’s robust gains were largely due to a sharp reversal in temperature across much of the country as cool weather looks to be the norm in large parts of the Northeast and Midwest this weekend and next week. Thanks to this, demand for electricity could be on the rise, pushing usage of natural gas sharply higher this coming week. Additionally, from a technical perspective, natural gas futures and UNG look pretty solid, at least according to some analysts. “The market kind of showed there was strong support at the $3.47 mark, and I think that’s where it bounced off,” said Kent Bayazitoglu, an analyst with advisory firm Gelber & Associates in Houston. “It really couldn’t fall much further.” Thanks to these technicals, the general oversold nature of UNG as of late, and the forecast of colder weather, many investors felt comfortable buying up UNG shares heading into the second half of October [see technicals of UNG here].
One of the biggest losers in the ETFdb 60 was the iPath S&P 500 VIX Short Term Futures ETN (VXX) which sank by 5.6% on the day. Today’s heavy losses in this ETN representation of the ‘fear index’ came as investors felt even more optimistic about Europe and focused in on solid data here in the U.S. In terms of data on the home front, many focused in on two points today to lead the markets higher; retail sales and Google’s earnings. Retail sales advanced 1.1% for the most recent month, crushing the previous month’s total and blowing by expectations which called for a gain of just 0.7%. Meanwhile, on the tech side, Google crushed analyst expectations as well, as the search engine giant reported its latest earnings after the bell last night. GOOG saw earnings of $9.72 a share for the period, easily beating $8.76 estimates and increasing sentiment across the board. As a result, few investors felt the need to hold onto this safe haven heading into the weekend, pushing VXX sharply lower in Friday trading [see charts of VXX here].
Disclosure: No positions at time of writing.