Dow’s 35 all-time-high closes in 2017 put it halfway toward a record number of records

The Dow Jones Industrial Average has been hitting a lot of records lately, including ending each of the past nine sessions at closing highs. But it is only about halfway to hitting a record number of records.

The blue-chip average DJIA, -0.15% has registered 35 record closes thus far in 2017, according to data from Bespoke Investment Group. Those gains have come amid improving corporate earnings, a strong labor market, and an environment marked by both low interest rates and low inflation. They also come in a bull market that has seen stocks rise in essentially uninterrupted fashion ever since the post-financial-crisis bottom of 2009; the Dow has posted new records in every calendar year since 2013.

The records in 2017 have largely come in two chunks: a 12-day stretch of records in February, and the current streak of nine.

While 35 record closes may sound like a lot, it would only make for the 16th-highest annual number, according to data going back to 1900. The total was topped as recently as 2014, which featured 38 record-high closes, a number that was itself down from the recent peak of 52 hit in 2013. The all-time-records record occurred in 1995, when the Dow saw 70 all-time-high closes — about one every three trading days. That occurred during the run-up to the dot-com-era peak.

Of course, those totals are for full calendar years, and 2017 still has nearly five months’ worth of trading left. “While nothing is guaranteed, there’s still plenty of room for this year to add to the total of new highs,” Bespoke observed in a note.

Looking solely at records registered between Jan. 1 and Aug. 7, the date of the most recent Dow record, 2017’s total looks more impressive. The last time the blue-chip average had this many records in the first eight months of the year was in 1997, when 39 highs were notched over the comparable period. The greatest number of records ever hit in this same time period was 49, which occurred in 1987.

As the Dow has rung up its 35 historically high closes, the S&P 500 SPX, -0.24% has registered 30 records, its highest total since 2014, while the Nasdaq Composite Index COMP, -0.21% has scored 44, the most since 1999, according to Dow Jones data. Years in which the S&P 500 hits a record feature an average of 29 all-time-high closes, according to the data. For the Nasdaq, the tech-heavy index, on average, hits 31 records in years when it posts a new closing high.

Dow ends at record for 8th straight day, powered by jobs report

U.S. stocks closed higher on Friday, with the Dow ending at a record for an eighth straight session following a read on the labor market that came in above expectations, a sign that current valuations may be supported by current economic activity.

The Dow Jones Industrial Average DJIA, +0.30% gained 66.71 points, or 0.3%, to 22,092.81, finishing at its highs of the session, which also represented an intraday record. The blue-chip average has risen for a nine straight trading days, its longest such streak since February. With the day’s record, it has now posted 34 record closes thus far this year.

The S&P 500 SPX, +0.19% rose 4.67 points, or 0.2%, to 2,476.83, while the Nasdaq Composite Index COMP, +0.18% climbed 11.22 points, or 0.2%, at 6,351.56. All three indexes dipped into slightly negative territory within the first hour of trading, but subsequently rebounded, ending near their highs of the session.

“There are some concerns that we’re fully valued, but we’re of the thesis that markets will continue to grind higher until the end of the year,” said Jeff Zipper, managing director of investments at U.S. Bank Private Client Wealth Management. “Corporate earnings show that both the top line and the bottom line are coming in nicely, which justifies where we’re trading.”

 The report is seen as crucial for the Federal Reserve as it decides whether to raise interest rates one more time this year. After a string of lackluster economic readings recently, investors are starting to doubt further monetary tightening is in the cards in the short term, especially absent signs of rising inflation. Those doubts have helped send the dollar sharply lower.

However, the buck was enjoying a bit of a resurgence, with the ICE U.S. Dollar DXY, +0.75% a measure of the buck against a basket of a half-dozen currencies, up 0.7%.

“The number came in above consensus, but in the ballpark we were expecting, so we’re taking it in stride,” Zipper said. “There were no big surprises, and net-net, I think the Federal Reserve remains on track for one more interest rate hike this year after this.”

For the week, the Dow rose 1.2%, its second straight weekly rise, as well as its fourth positive week of the past five. The S&P rose 0.2% on the week, while the Nasdaq ended lower by 0.4%. The S&P is less than half a percentage point away from its own record, while the Nasdaq is less than 2 percentage points below its own

Gold prices hold up well, weaker dollar helps

Base metals prices on the London Metal Exchange are broadly weaker this morning, Tuesday August 1, with losses averaging 0.4%. Copper and aluminium are little changed, with three-month copper prices at $6,378 per tonne, while the rest are down between 0.4% and 0.6%.

Volume has been average with 5,294 lots traded as of 06:17 BST.

This comes after a day of general gains on Monday, led by a 0.5% rally in zinc, copper closed up 0.4% and aluminium prices closed up 0.3%, while lead and tin were up 0.1% and nickel bucked the trend with a 0.5% decline.

Precious metals are firmer this morning with the PGMs up an average of 0.6%, while silver prices are up 0.2% and gold prices are up 0.1% at $1,270.10 per oz. This comes after a generally strong day for precious metals on Monday when prices closed up an average of 0.4%.

On the Shanghai Futures Exchange (SHFE), most of the base metals are weaker led by 1.2% and 1.1% losses in tin and nickel, respectively, with lead and zinc prices both off 0.2%, while copper is up 0.1% at 50,390 yuan ($7,500) per tonne and aluminium has bucked the trend with a 0.7% gain. Spot copper prices in Changjiang are down 0.2% at 50,050-50,250 yuan per tonne and the LME/Shanghai copper arb ratio is at 7.90.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 3.3% at 573 yuan per tonne. On the SHFE, steel rebar prices are up 1.4%, while gold prices are unchanged and silver prices are up 0.3%.

In international markets, spot Brent crude oil prices are up 0.3% at $52.76 per barrel, the yield on US ten-year treasuries is firmer at 2.3% and the German ten-year bund yield is little changed at 0.54%.

Equities were mixed on Monday with the Euro Stoxx 50 closing down 0.5% but the Dow closed up 0.3%, although the S&P 500 and Nasdaq composite closed off 0.1% and 0.4%, respectively. Asian markets are firmer though with the ASX 200 up 0.9%, the Hang Seng and Kospi are up 0.8%, the CSI 300 is up 0.7% and the Nikkei is up 0.3%.

The dollar index continues to sink, it set a fresh low for the year at 92.78 yesterday, it was recently quoted at 92.88 – more unrest in US president Donald Trump’s administration continues to weigh on the dollar. Conversely, the euro is strong at 1.1827, as are sterling at 1.3223, the yen at 110.20 and the Australian dollar at 0.8019. The yuan at 6.7185 is climbing; it is the strongest it has been since October 2016, while most of the other emerging currencies we follow are little changed-to-firmer, the exception being the rand, which at 13.1792 is weaker.

The economic agenda is busy – Chinese Caixin manufacturing PMI data came out strong at 51.1, after a previous reading of 50.4, while Japan’s manufacturing PMI dipped to 52.1 from 52.2 and the Bank of Japan’s core CPI held steady at 0.3%. Data out later includes manufacturing PMI out across Europe, EU flash GDP, with US data including personal income spending and PCE price index, final manufacturing PMI, ISM manufacturing PMI, ISM manufacturing prices, construction spending and total vehicle sales.

Copper prices are managing to generally hold on to most of its recent gains and the metal looks strong, while the other metals appear not to be convinced that they should be following copper’s lead. Nickel and tin prices have followed copper’s lead the most, but they are now consolidating, while lead and zinc have struggled to break higher and aluminium prices are struggling to even hold above nearby support.

Given we are in the summer slowdown, it is not that surprising that most of the metals are not gunning higher as it is a quiet time for consumers. This suggests that the buying in copper may be more to do with spec shorts covering. The funds trading Comex copper have become increasingly polarised in recent months. Option declaration tomorrow may be suppressing the likes of aluminium, we wait to see once declaration has passed whether the lids capping the metals are lifted. Given better Caixin PMI data we would have thought the metals would be more bullish this morning than they are.

Gold prices are holding up well, as they should be given the weaker dollar, the continuing dysfunction of Trump’s administration and potential for geopolitical issues to rise as North Korea seems to be pressing ahead with its missile agenda. Silver is following gold’s lead, while platinum is firmer and palladium is challenging recent high ground again. We wait to see what tonight’s US total vehicle sales data shows – a disappointing figure could weigh on the PGMs.

 

Silver price forecast and analysis for Q2 2016

Silver jumped 11 percent in the first quarter after falling 12 percent last year to its lowest since 2009. Its strong performance reflected a marked improvement in investment and speculative demand, largely triggered by the rally in gold. Since we expect gold to push higher in the second quarter, we see further upside in silver, with a three-month range of $15-18. But we believe downward pressure will re-emerge in the second half amid weaker industrial demand.

Silver enjoyed a positive shift in sentiment in the first quarter largely due to an impressive rally in gold prices, which itself was driven by a weaker dollar and a steep fall in US real interest rates amid renewed risk aversion and lower Fed tightening expectations. We expect sentiment to remain positively skewed in the second quarter, which should translate into further ETF and speculative demand, mainly because risk aversion should prevail amid a macroeconomic environment challenged by growing political uncertainty. Importantly, the gold-silver ratio, which averaged 79 in the first quarter, hit an extremely high historical level, making silver look relatively cheap compared to gold at current price levels. We believe the ratio could revert toward its longer-term (1980-today) average of 62, which would result in a considerable outperformance of silver relative to gold. Against this backdrop, silver could surprise to the upside and reach new year-to-date highs in the second quarter. Later in the year, however, we expect downward pressure to re-emerge for two reasons. First, the strong increase in monetary demand for silver in the early months of 2016 should not last, partly because of higher prices. Second, industrial demand, which accounts for 54 percent of total silver demand, is likely to fall further this year after falling 4.1 percent in 2015 on weaker industrial demand growth, especially from EM economies.

ETF investors bought 745 tonnes of silver in the first quarter of the year after selling 506 in 2015, 181 tonnes in 2014 and 82 tonnes in 2013. We think ETF buying could remain steady in the second quarter before reversing later this year due to profit-taking.

Money managers bought a record 6,249 tonnes on Comex in the first quarter after selling 943 tonnes in 2015. Although speculative positioning is overstretched, we believe buying interest will remain strong in the second quarter but could turn into strong selling in the second half

 

Oil posts best weekly gain this year, up 8.6% to $49.71 on signs of market rebalancing

Oil prices edged higher on Friday, reaching new two-month highs and posting the strongest weekly percentage gains this year as investors digested signs of an easing oversupply.

U.S. West Texas Intermediate (WTI) crude futures ended Friday’s session up 67 cents, or 1.4 percent, to $49.71. It surged 8.6 percent on the week.

Brent crude futures were up $1.01, or 2 percent, at $52.50 a barrel a barrel by 2:34 p.m. (1834 GMT), rising more than 9 percent this week.

The front of the crude oil curve jumped into backwardation, with the month-ahead trading above the subsequent month, showing investors are not expecting recent gains to last. Brent also broke above its 200-day moving average, a key technical level, for the first time since May 30.

U.S. crude and gasoline inventories fell much more steeply than expected this week and the world’s biggest oil exporter Saudi Arabia said it would further reduce oil output in August.

“Positive signs came from the draw in gasoline stocks this week, as the U.S. moves into the peak driving season,” said Ashley Kelty, oil analyst at Cenkos Securities.

Oilfield services firm Baker Hughes reported the number of oil rigs operating in the United States rose by 2 to a total of 766 last week. The rig count has risen fairly steadily for more than a year, but the growth has recently moderated.

U.S. crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration (EIA).

Brimming U.S. crude supplies have been a challenge to production cuts to prop up prices led by the Organization of the Petroleum Exporting Countries, meaning weekly U.S. inventory data is closely watched.

U.S. crude oil production has been on the rise since mid-2016,but it dropped to 9.41 barrels per day (bpd) in the week to July 21, from 9.43 million bpd the week before. The decline was mainly due to a fall in Alaskan output, ANZ bank said.

Oil prices have been supported by a further agreement reached between OPEC and some non-OPEC members to limit Nigerian oil output and encourage several members to comply with their pledged production cuts.

Since the world’s major oil producers held a meeting in St Petersburg on Monday, crude prices have risen some 7 percent on expectations of deepening cuts.

Saudi Arabia, the OPEC’s de facto leader, said it planned to cap crude exports to 6.6 million bpd in August, about 1 million bpd below the level last year.

Despite bullish signs, some analysts’ assessments of the oil market remained bearish.

“We believe the latest price rise is on a fragile footing,” said analysts at Commerzbank, adding OPEC production was likely to rise in the coming months as the group has not officially capped output from members Libya and Nigeria.

Dollar declines as GDP data underwhelms

The U.S. dollar was broadly lower on Friday as a combination of underwhelming U.S. economic data and political uncertainty kept traders biased toward the euro and other world currencies.

The euro hit a session high after the release of U.S. second-quarter gross domestic product estimates that largely met economists’ expectations.

Some analysts pointed to a smaller-than-expected increase in U.S. labor costs, but others suggested the data was just an excuse for traders to continue the weak dollar trade that has sent the U.S. currency lower for much of this year.

 U.S. gross domestic product growth picked up to 2.6 percent in the second quarter, matching expectations of economists polled by Reuters, while growth in the first quarter was revised down to 1.2 percent.

“I think this just removes an obstacle,” said Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co. “The euro bottomed yesterday in New York trading and its been climbing ever since. If anything, the GDP number pushed an open door.”

The euro has risen nearly 3 percent against the dollar so far this month and more than 11.5 percent in the year to date. It is on track for its third weekly gain in a row and the fourth in five weeks.

On Friday, the euro moved higher against the dollar, and was last up 0.7 percent at $1.1756. On Thursday, the euro rose to its highest against the greenback in 2-1/2 years before retreating in later trading.

The weakness of the dollar has been most evident against the euro this year, but it has fallen against most major currencies as expectations for U.S. fiscal stimulus and an increased pace of overnight interest rate hikes from the Federal Reserve have dissipated.

“The dollar was rising (last year) on the basis of the U.S. being seen as probably the first major central bank to engage in a (monetary policy) tightening bias,” said Tom Hainlin, national investment strategist at U.S. Bank.

“Then ultimately we saw almost a synchronized amount of talk coming from major central banks that the U.S. wasn’t the only game in town in terms of slowing its easing bias or even tightening.”

The U.S. Senate’s failure to pass a repeal of the 2010 Affordable Care Act overnight also hurt the greenback, analysts said.

The dollar fell 0.9 percent to C$1.2436 against the Canadian dollar after Canada’s May GDP growth was triple what economists had expected, rising 0.6 percent for the month and 4.6 percent year over year.

Dow posts record close as Wall Street shakes off Amazon’s fall

U.S. equities closed well off session lows on Friday investors shook off a sharp pullback from Amazon.com.

The Nasdaq composite ended 0.1 percent lower at 6,374.68 after falling as much as 0.7 percent. The tech heavy-index climbed its lows as Facebook, Netflix and Google-parent Alphabet erased earlier losses.

The Dow Jones industrial average closed 33.76 points higher at 21,830.31, notching intraday and closing highs.

The S&P 500 declined 0.13 percent to close at 2,472.10 after falling as much as 0.43 percent. Consumer staples led seven sectors lower.

Amazon.com shares fell as much as 4.3 percent on the back of much weaker-than-expected quarterly results. Amazon posted second-quarter earnings per share of 40 cents. Analysts polled by Reuters expected earnings of $1.42 a share. Sales, however, came in above expectations.

The stock closed 2.5 percent lower.

“What you’re seeing here is a market that’s being driven largely by earnings,” said Matthew Peterson, chief wealth strategist at LPL Financial. “It’s not surprising to see investors take profits on some bad news.”

The initial pullback in tech came a day after the sector dragged the broader market lower as investors took profits off the table. The major indexes notched a record high Thursday before tech rolled over midway through the session.

“The SPX and NDX saw ‘outside-down’ days yesterday, increasing the likelihood of downside follow-through in the days ahead,” Katie Stockton, chief technical strategist at BTIG, said in a note.

“It appears that typical August volatility may already be upon us. Initial support for the SPX is defined by the 50-day moving average, and secondary support is approximately 2400, about 3% below current levels,” she said.

Tech has been the best-performing sector of the year, advancing approximately 22 percent.

“The market has been looking for growth everywhere and it’s been tech that’s provided it,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. “We’ve been at this slow-and-steady growth rate and tech has been outperforming everything else.”

The major indexes posted a mixed weekly performance, with the S&P and Nasdaq ending slightly lower while Dow rose 1 percent in the time period. Investors also digested a slew of earnings reports this week. Earnings season continues next week as Apple is set to report Tuesday after the close.

Dollar falls on perceived ECB path, U.S. political roadblocks

The U.S. dollar hit its lowest level in more than a year against a basket of major rivals on Friday a day after the European Central Bank’s chief abstained from talking down the euro, while obstacles to U.S. President Donald Trump’s policy agenda also weighed.

ECB President Mario Draghi said on Thursday that financing conditions remained broadly supportive, and noted that the euro’s appreciation had “received some attention.” However, he did not cite that strength as a problem nor did he directly try to talk the currency down.

Draghi’s apparent lack of concern about the strengthening euro convinced traders that the central bank remained on track to potentially begin tapering its bond-buying stimulus later this year.

The dollar index touched 93.952, its lowest level since June of last year, and was last down 0.38 percent at 93.94. The euro touched $1.1677, its highest level against the dollar in nearly two years, and was last up 0.30 percent on the day at $1.1664.

“The fact that Draghi didnt necessarily argue too much against the strength of the euro … certainly gave the greenlight for individuals to want to own the currency again or actually add to their positions,” said Dean Popplewell, chief currency strategist at Oanda in Toronto.

The euro was last on track to gain 1.8 percent for the week, which would mark its second straight weekly rise against the dollar. The dollar index was set to fall 1.3 percent to mark its second straight weekly decline.

Against the yen, the dollar touched more than four-week low of 111.02 yen.

In addition to traders’ expectations that the ECB was staying the course toward tightening monetary policy, investigations into alleged Russian meddling in the U.S. election and possible collusion with Trump’s campaign were viewed as obstacles to the administration’s pro-growth agenda and negative for the dollar.

“Compounding the (weaker dollar) move is this latest news on the political front in the U.S. about the Russia investigation expanding to Trumps business affairs,” said Alvise Marino, FX strategist at Credit Suisse in New York.

“This is on top of the fact that Senate has not been able to pass anything meaningful on the healthcare front,” he said in reference to the collapse late on Monday of a Republican effort to overhaul the U.S. healthcare system.

The dollar touched its lowest against the Swiss franc in more than a year at 0.9468 franc.

Dow closes lower on General Electric’s stock drop

U.S. equities fell on Friday as General Electric led industrial stocks lower.

The Dow Jones industrial average fell more than 100 points before closing 31.71 points lower at 21,580.07. General Electric fell 2.9 percent to lead decliners.

The S&P 500 slipped 0.04 percent to close at 2,472.54, with industrials and energy leading decliners.

 The Nasdaq composite ended 0.04 percent lower at 6,387.75 and snapped its longest winning streak since February 2015.

General Electric reported better-than-expected quarterly results, but sales fell 12 percent year over year. The drop in revenue came as weakness in GE’s energy connections business offset strength in renewables and power units. GE also saw its net profit slump 58 percent year over year.

The three major indexes notched record highs this week as quarterly earnings from S&P 500 companies largely outperform expectations. Microsoft, Honeywell and Morgan Stanley are just a few of the companies that reported earlier this week.

“It’s been a strong week for stocks,” said Peter Cardillo, chief market economist at First Standard Financial, noting the S&P and the Nasdaq posted weekly gains. “There a bit of hesitance right now as we head into the weekend.”

Next week will be the busiest one this earnings season, with about 170 S&P 500 components scheduled to report.

“This is very much an earnings-driven market,” said Paul Springmeyer, senior vice president at U.S. Bancorp Private Wealth Management. “There have not been any major surprises yet. That to us is a tell-tale sign. If earnings continue to grow, stocks should keep higher.”

Calendar second-quarter earnings have mostly exceeded expectations this far. With 20 percent of S&P 500 companies having reported, 73 percent have beaten expectations and 77 percent have beaten on sales, according to John Butters, senior equity analyst at FactSet.

“They will have to walk a fine line between showing strong resolve to rebalance the market, while avoiding a sudden display of panic so soon after the May OPEC meeting,” she said.

Crude prices erased earlier gains after Reuters reported — citing a firm that forecast OPEC supply — that OPEC supply for July would increase 145,000 barrels per day from June. West Texas Intermediate futures for September delivery fell 2.5 percent to settle below $46 a barrel.

In Europe, equities fell broadly as the euro climbed higher. The German Dax fell nearly 2 percent and was on track for its worst day of the year. The common currency, meanwhile, advanced 0.42 percent to $1.167, building on Thursday’s strong gains.

 

 

Gold prices dip ahead of US non-farm payrolls data

Gold prices inched down early on Friday to hover around their lowest in nearly two months,
with investors waiting for key U.S. non-farm payrolls data later in the day.

Spot gold had fallen 0.2 percent to $1,222.65 per ounce by 0104 GMT. It has dropped 1.5 percent this week and could be heading for its biggest weekly decline since early May.

U.S. gold futures for August delivery declined 0.1 percent to $1,222.40 per ounce.

The dollar was steady in early Asian trade on Friday, on track for weekly gains but likely to tread water throughout the day as investors braced for the monthly U.S. employment numbers.

U.S. private employers hired fewer workers than expected in June and applications for unemployment benefits last week increased for a third straight week, pointing to some loss of momentum in job growth as the labor market nears full employment.

U.S. Treasury yields rose on Thursday, with benchmark yields touching nearly eight-week highs, on the prospect of hawkish global central bank policy and concern that rising oil prices could spur inflationary pressures.

U.S. President Donald Trump vowed on Thursday to confront North Korea “very strongly” following its latest missile test and urged nations to show Pyongyang there would be consequences for its weapons program.

Trump and Russian President Vladimir Putin are set to size each other up in person for the first time on Friday in what promises to be the most highly anticipated meeting on the sidelines of the G20 summit.

European Central Bank policymakers are open to a further step towards reducing their monetary stimulus but are likely to move slowly out of fear of causing market turmoil, minutes of
their last meeting showed on Thursday.

China’s central bank said on Thursday that it would strengthen the ability to adjust interest rates and improve efficiency of its medium-term lending facility (MLF), standing lending facility (SLF) and reverse repos operations.

An increase in taxes on gold sales in India could curb short-term demand from the world’s No. 2 consumer of the metal, the World Gold Council (WGC) said.

Gold demand in India lost steam this week as consumers held off after stepping up purchases ahead of a new tax policy effective this month, while fresh buying in China also remained sluggish despite a slide in global spot prices.