Dow, S&P hit milestones as Wall St extends rally

By Rodrigo Campos

NEW YORK Mon Nov 18, 2013 10:27am EST

1 of 4. Traders work on the floor of the New York Stock Exchange, November 14, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - The Dow and S&P 500 extended their record highs on Monday, ticking above 16,000 and 1,800 respectively, as trading continues to focus on economic stimulus from the Federal Reserve.

The Nasdaq Composite neared 4,000, a level it hasn't seen since September 2000. The round numbers on major levels could provide some technical resistance at first, but clearing them could attract investors and managers eager to chase performance.

"It could be these numbers cause us to stutter a little bit here," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.

Three Fed presidents are expected to speak Monday, with New York's William Dudley out on economic conditions at 12:15 p.m. EST (1715 GMT), Philadelphia's Charles Plosser on the economic outlook at 1:30 p.m. (1830 GMT) and Minneapolis' Narayana Kocherlakota on "Too Big to Fail: the Need for Metrics" at 7:45 p.m. (0045 GMT Tuesday).

With intervention from the Fed seen keeping interest rates near zero for the foreseeable future, equities are expected to continue to attract yield-seeking investors even after the Fed begins to slow its monthly asset purchases.

"The Fed is going to taper when the economy doesn't need the push any more," Manley said. "Support from the Fed will go away only when it's not needed."

The Dow Jones industrial average .DJI rose 39.7 points or 0.25 percent, to 16,001.4, the S&P 500 .SPX lost 0.65 points or 0.04 percent, to 1,797.53 and the Nasdaq Composite .IXIC dropped 6.857 points or 0.17 percent, to 3,979.111.

The S&P earlier hit 1,802.33 and the Dow 16,030.28, their highest levels ever. On Friday, both closed at record highs on their sixth straight week of gains.

Airbus (EAD.PA) and Boeing (BA.N) signed deals to buy about $5 billion of parts and materials from Abu Dhabi, in a sign Gulf states are seeking a reciprocal boost to their economies from the huge aircraft orders they have placed. Boeing shares added 2.9 percent to $140 after earlier hitting $142.

Sony Corp (6758.T) (SNE.N) said on Sunday it had sold 1 million units of its new PlayStation 4 gaming console in the first 24 hours it was available in the United States and Canada. U.S.-traded Sony shares rose 2.3 percent to $18.92 while Microsoft (MSFT.O), maker of competing console Xbox, fell 1.5 percent to $37.27. The new Xbox One console goes on sale Friday.

Tyson Foods (TSN.N) shares rose 3.8 percent to $29.86 after it reported a better-than-expected quarterly operating profit and said it expected meat production to rise in the current fiscal year.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama and Nick Zieminski)

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Short covering rally likely in precious metals after a sharp fall

Last week gold fell by 8.5%, silver by 13.6%, platinum and palladium fell by less than 6%.6.0%. There were a number of reasons for the drop in the gold price. In our view it was a classic case of speculative investors taking advantage of gold-negative fundamental news and causing technical break-points to be breached, driving a self-fulfilling downward price spiral.

LONDON (Bullion Street): A short covering rally in gold is likely even as short gold contracts have fallen slightly as shorts remain elevated as per data released by US CFTC last Tuesday, according to ETF Securities Ltd (ETFS).

"Indeed, the stabilisation of gold prices may be an indication of that already occurring. However, the near-term outlook for gold is likely to remain weak as investors focus on the improving US economy and its implications for ess monetary easing. Even those bruised by last week's events are likely to return their attention to the fundamentals and over the longer-term, the outlook for gold remains constructive," ETFS added.

Last week gold fell by 8.5%, silver by 13.6%, platinum and palladium fell by less than 6%.6.0%. There were a number of reasons for the drop in the gold price. In our view it was a classic case of speculative investors taking advantage of gold-negative fundamental news and causing technical break-points to be breached, driving a self-fulfilling downward price spiral. The short-term fundamentals on their own were only mildly negative but once prices fell below US$1,550/t oz., an important technical support level, prices plummeted down to a two-year low, triggering margin calls, momentum and model-based investor selling. Some investors saw the new price level as an attractive entry point. While some short-term tactical players have reduced their long exposure to gold (and some have actively increased short positions), physical buyers have emerged as evidenced by expanding premiums in India and China and strong demand for gold coins, ETFS said.

Key events to watch this week:
The widening divide in growth between the US and the Eurozone is again likely to be highlighted this week, with Eurozone manufacturing indicators expected to show the sector firmly in contraction territory. In contrast, US Q1 GDP is expected to show the world's largest economy grew by 3% annualised over the period. As highlighted in the G20 statement, ongoing policy uncertainty and fiscal sustainability are key constraints to growth and this divide is unlikely to be bridged in the foreseeable future.

Photo Courtesy: BigStockPhoto.com?

View the original article here

Short covering rally likely in precious metals after a sharp fall

Last week gold fell by 8.5%, silver by 13.6%, platinum and palladium fell by less than 6%.6.0%. There were a number of reasons for the drop in the gold price. In our view it was a classic case of speculative investors taking advantage of gold-negative fundamental news and causing technical break-points to be breached, driving a self-fulfilling downward price spiral.

LONDON (Bullion Street): A short covering rally in gold is likely even as short gold contracts have fallen slightly as shorts remain elevated as per data released by US CFTC last Tuesday, according to ETF Securities Ltd (ETFS).

"Indeed, the stabilisation of gold prices may be an indication of that already occurring. However, the near-term outlook for gold is likely to remain weak as investors focus on the improving US economy and its implications for ess monetary easing. Even those bruised by last week's events are likely to return their attention to the fundamentals and over the longer-term, the outlook for gold remains constructive," ETFS added.

Last week gold fell by 8.5%, silver by 13.6%, platinum and palladium fell by less than 6%.6.0%. There were a number of reasons for the drop in the gold price. In our view it was a classic case of speculative investors taking advantage of gold-negative fundamental news and causing technical break-points to be breached, driving a self-fulfilling downward price spiral. The short-term fundamentals on their own were only mildly negative but once prices fell below US$1,550/t oz., an important technical support level, prices plummeted down to a two-year low, triggering margin calls, momentum and model-based investor selling. Some investors saw the new price level as an attractive entry point. While some short-term tactical players have reduced their long exposure to gold (and some have actively increased short positions), physical buyers have emerged as evidenced by expanding premiums in India and China and strong demand for gold coins, ETFS said.

Key events to watch this week:
The widening divide in growth between the US and the Eurozone is again likely to be highlighted this week, with Eurozone manufacturing indicators expected to show the sector firmly in contraction territory. In contrast, US Q1 GDP is expected to show the world's largest economy grew by 3% annualised over the period. As highlighted in the G20 statement, ongoing policy uncertainty and fiscal sustainability are key constraints to growth and this divide is unlikely to be bridged in the foreseeable future.

Photo Courtesy: BigStockPhoto.com?

View the original article here