Investing.com – Top 5 things that rocked U.S. markets this week
1. Bullish Earnings Help S&P500 Avert Weekly Loss Despite Rising Geopolitical Tensions
Geopolitical fears swept through markets, causing large swings to the downside but a raft of solid corporate earnings ensured the S&P 500 held gains to post a weekly win.
President Donald Trump’s decision to cancel the planned summit with North Korea rocked markets on Thursday a day after the Federal Reserve’s dovish minutes had triggered a rally.
The Federal Reserve on Wednesday confirmed the need for gradual rate hikes but showed policymakers were comfortable with inflation overshooting target, lessening the prospect of a faster pace of rate hikes.
Trump’s reverse ferret on North Korea Friday, suggesting a meeting with North Korea’s Kim Jong Un could still take place drew muted supported in markets, but a bullish report from Foot Locker kept a lid on losses.
Foot Locker reported earnings of $1.45 per share on $2.03 billion revenue, topping consensus estimates, sending shares of Foot Locker Inc (NYSE:FL) soaring more than 20%.
The S&P 500 posted a weekly gain despite closing 0.24% lower on Friday.
2. Crude Oil Prices Post Worst Weekly Loss Since February
Crude oil prices suffered their biggest weekly loss since February after an ugly session on Friday saw traders reverse some of their bullish bets on a shortage in global supplies following reports major oil producers could lift output.
Major oil producers were reportedly eyeing an exit of the output-cut agreement to counter the falling Venezuelan output and the prospect of lower Iranian output as U.S. sanctions loom.
Oil prices were also rocked by an Energy Information Administration report Wednesday showing an unexpected build in U.S. crude stockpiles last week.
Crude futures settled 4% lower on Friday as data showed U.S. oil rigs resumed their expansion, pointing to signs of growing domestic output.
3. Dollar Notches Second Weekly Win
The dollar recorded its second-straight weekly gain after a mid-week wobble following the Federal Reserve's dovish minutes, denting expectations for a fourth rate hike at the U.S. central bank’s December meeting.
The prospect of a fourth rate has plunged to under 30% from nearly 45% earlier in the week, according to Investing.com’s Fed Rate Monitor.
The dollar's move higher was also supported by an ongoing slump in EUR/USD amid growing Eurozone geopolitical uncertainty as Spain’s Prime Minister Mariano Rajoy faces a vote of no confidence tabled by the main Socialist opposition party.
Political angst in Italy, meanwhile, continued to pressure the single currency, further boosting the greenback.
The dollar traded at a six-month high against a basket of major currencies on Friday.
4. Gold Finds Its Lustre
Gold prices posted a weekly win as falling bond yields cushioned pressure from a surging dollar.
The rampant rise in the 10-year treasury yield cooled, falling below 3% as the underlying dovish tone observed in the Fed minutes saw bond prices rise – which trade inversely to yields – supporting the yellow metal.
Also supporting gold was the return of safe-haven demand as U.S. and China tensions flared after President Trump said he was not satisfied with the progress of recent trade negotiations.
The yellow metal rose sharply on Thursday, when Trump cancelled a scheduled meeting with North Korea but changed tact a day later following conciliatory comments from North Korea overnight.
5. Bitcoin: Fool Me Once. . .
Fears of a widespread regulatory crackdown on cryptocurrencies saw nearly $40 billion wiped off the crypto market this week as traders abandon their bullish bets.
North American regulators launched “Operation Cryptosweep,” stepping up efforts to rid the crypto space of fraudulent activity, urging investors to carefully consider crypto purchases, particularly those that relate to initial coin offerings.
That halted the attempted recovery in cryptos from last week's slump, sounding the alarm bells for a further regulatory crackdown in the crypto industry.
Just days after “Operation Cryptosweep” was revealed, the Justice Department opened a criminal investigation into possible bitcoin price manipulation, adding to fears of regulatory pressures.
As negative sentiment on cryptos continued to gather pace, traders cut their crypto holdings, sending the total crypto market cap tumbling to about $328 billion, down nearly $40 billion, from about $367 billion last week.
Over the past seven days, Bitcoin fell 9.32% on the Bitfinex exchange, Ethereum fell 15.06%, while Ripple XRP fell 10.05% on the Poloniex exchange.