Stocks, Gold Up, But Dollar, Bonds Slip
Friday November 21, 5:38 pm ET
By Dave Zimmerman
NEW YORK (Reuters) - Stocks and gold rose, but the dollar, government debt and oil struggled to find footing on Friday at the end of a week marked by deadly attacks in Turkey and rising tension in Iraq.
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"There is a little bit of bargain hunting today with no economic data to feed on," said John Simon, stock index futures analyst at TradeSignals.com, a commodity trading adviser.
Rocket attacks on Friday shook hotels and the Oil Ministry in Baghdad, strikes linked to the U.S.-led occupation of Iraq. On Thursday, stocks dropped amid rising security fears following twin bombings against British targets in Istanbul that left 27 dead.
On Wall Street, technology stocks nosed higher as investors tiptoed into the market, but Merck & Co. Inc. (NYSE:MRK - News) kept a lid on blue chips' gains after the giant drug company scrapped its second experimental medicine in 10 days.
The blue-chip Dow Jones industrial average (^DJI - News) rose 9.11 points, or 0.09 percent, to end at 9,628.53. The tech-laden Nasdaq Composite Index (NasdaqSC:^IXIC - News) gained 11.96 points, or 0.64 percent, to finish at 1,893.88, based on the latest available figures. The broad Standard & Poor's 500 index (CBOE:^SPX - News) inched up 1.63 points, or 0.16 percent, to close at 1,035.28.
Although the major U.S. stock indexes managed to eke out gains on Friday, they finished the week lower. Both the Dow and the S&P 500 slipped 1.4 percent, while the Nasdaq fell 1.9 percent.
Merck was the Dow's biggest percentage loser, sinking $2.93, or 6.5 percent, to $42.23. The company, the world's third-largest drugmaker, discontinued its second experimental medicine in 10 days -- this time a diabetes drug found to cause cancer in mice.
GOLD RUSH
COMEX gold rose after Canada's Barrick Gold Corp.(Toronto:ABX.TO - News), long among the most active hedgers, said it was no longer committed to selling the metal forward to protect future production from falling prices.
The news underscored that the trend among producers to reduce their hedge books was still firmly in place. Along with the falling dollar, such "dehedging" has been a major factor in the 2003 bull market, which saw gold trade above $400 for the first time since March 1996 on Wednesday.
"It should be absolutely bullish," said James Pogoda, vice president of precious metals at Mitsubishi International Corp. "I thought we would be a bit higher. Any time we've gotten close to $400, it's been capped."
COMEX December gold (0#GC:) surged $2.30 to end at $396.00 an ounce, rallying from a low of $393.10, just before Barrick said it was changing its policy, to a session high at $398.20.
A DOWN DAY FOR DOLLAR, BONDS AND OIL
The dollar was little changed after recovering from a downward blip related to a report of a new threat against the United States and Japan.
Traders linked the currency's move to a report by a Saudi newspaper, Al-Majallah, that was picked up by several news agencies. Reuters was not immediately able to confirm the veracity of the reports.
"I think that it's just continuing with this theme that there's a lot of risks out there," said Lauren Germain, currency analyst at Bank of America in New York. "There wasn't much going on today, so any type of news was going to drive it."
Late Friday in New York, the euro was at $1.1911(EUR=), up slightly from $1.910 at Thursday's U.S. session close. The dollar slipped to 108.74(JPY=) from 108.92 yen late Thursday in New York.
Treasury prices, meanwhile, strained to reach new highs for the week as safe-haven concerns and option-related flows dominated an otherwise aimless session.
Many dealers were focused on a tussle in the options and futures markets, where the 10-year 114.00 option contract expired Friday.
Open interest in the calls was a hefty 83,270, meaning those on either side of the options had a considerable interest in seeing them end the day in or out of the money.
Late Friday, the cash 10-year U.S. Treasury note (US10YT=RR) edged down 1/32 at 100-23/32, putting its yield at 4.16 percent, up from 4.15 percent late on Thursday. Earlier in the day, the 10-year note's yield hit a fresh seven-week low at 4.11 percent -- a long way from the 4.45 percent highs seen in early November.
The 30-year bond (US30YT=TT) slipped 3/32 to 105-9/32, while its yield was at 5.02 percent, up a touch from 5.01 percent at Thursday's 5 p.m. close. Earlier in the day, the bond's yield hit a seven-week low at 4.98 percent.
The two-year T-note (US2YT=RR) ended the day down 1/32 at 99-20/32, while its yield was at 1.82 percent, up from 1.79 percent late Thursday in New York.
On the New York Mercantile Exchange, crude oil for January delivery(CLF4), which became the new leading contract on Friday, settled at $31.61 a barrel, down 25 cents. Traders decided to sell some energy futures and take some profits from gains earlier in the week, with the desire to make money overshadowing supply concerns stirred by the rocket attack on the Iraq Oil Ministry and Thursday's bomb attacks in Turkey.
In London, the blue-chip FTSE-100 index (London:^FTSE - News) gained 11 points, or 0.26 percent, to 4,319.0. For the week, the FTSE-100 was down just marginally from its close last Friday at 4,397.0, which marked a 14-month closing high.
In Tokyo, the benchmark Nikkei average (^N225 - News) ended virtually flat at 9,852.83, a dip of 0.13 percent. For the week, the Nikkei was down 3.09 percent, its second week of declines. (Additional reporting by Denise Duclaux, Bill Rigby, Gertrude Chavez, Alden Bentley, Gene Ramos and Pedro Nicolaci da Costa) |
