- The main American indices end up; FANGs, fleas outperform
- Energy leads the winners in the S&P sector; weakest group of utilities
- Dollar, gold ~ flat; gross bitcoin rally
- The 10-year US Treasury yield is ~ 1.478%
December 21 – Welcome home for real-time market coverage presented by reporters at Reuters. You can share your thoughts with us at [email protected]
US STOCKS REBOUND (1602 EST / 2102 GMT)
Major Wall Street indices rebounded strongly on Tuesday, with strength from economy-sensitive travel and stocks as well as Nike and Micron Technology following their earnings. This as stocks rebounded from a coronavirus-fueled rout the previous session.
Register now for FREE and unlimited access to Reuters.com
Thus, the yield of the US 10-year Treasury defied the level of 1.50%, in favor of bank stocks (.SPXBK). The (.IVX) value improved growth (.IGX) earlier in the session. Read more
That said, there was a definite shift in favor of growth rather than value later in the day. Chips (.SOX) and FANG (.NYFANG) outperformed, technology (.SPLRCT) arrived and banks deflated it. The yield only dropped back to around 1.47%.
Either way, the major averages all ended three-day losing streaks and the S&P 500 (.SPX) managed to recover its 50-day moving average at the close. The Dow Industrials (.DJI) and Nasdaq Composite (.IXIC) remain just below this closely watched medium-term moving average.
Here’s Tuesday’s closing snapshot:
FITCH PUT A POSITIVE LIGHT ON SEC MONEY MARKET FUND’S MOVE FROM SEC (1405 EST / 1905 GMT)
Recent rule changes by the United States Securities and Exchange Commission (SEC) aimed at reducing the risks of a new rush on money market funds could be a progressively positive credit development and most are likely to win. support from market participants, Fitch Ratings said on Tuesday.
Last week, the SEC said it had drawn up its plan following a large outflow in March 2020 sparked by investor concerns over the impact of the COVID-19 pandemic. The stress prompted the federal government to launch emergency liquidity facilities to support the market. Read more
Fitch said he took a positive view of the SEC’s proposal to eliminate liquidity fees and the use of gates to suspend redemptions when a fund’s liquidity falls below a threshold, noting that both have were identified as the drivers of the March 2020 cash outflows.
He added that the proposed increases to the minimum daily and weekly liquidity requirements “support credit.”
“We expect any period of rule implementation to be long enough to reduce potential market disruptions,” the credit rating agency said in a report. However, institutional and tax-exempt (money market funds) premiums could see fund outflows or closures if investors or fund managers feel that swing pricing would make funds unattractive or too complex on the plan. operational.”
As to the SEC’s proposal to adjust the value of funds based on trading activity, a process known as “swing pricing,” Fitch said this was not a factor. explicit rating in its criteria.
“The potential implications of ratings will most likely depend on whether a predefined swing pricing framework differs from both voluntary and subjective liquidity charges,” the report said.
HIGHEST SHARE BUYBACKS IN Q3 – S&P (1340 EST / 1840 GMT)
Corporate share buybacks hit a record $ 234.6 billion in the third quarter, according to Dow Jones Indicies data on Tuesday, and they are expected to continue at a higher level in the fourth quarter.
Buybacks marked an 18% increase from the $ 198.8 billion in the second quarter and are 5.2% above the previous record in the fourth quarter of 2018.
Of the S&P 500 (.SPX) components, 309 reported redemptions of at least $ 5 million for the quarter, up from 294 in the previous quarter. The top 20 companies accounted for 53.8% of buyouts in the quarter, down from 55.7% in the previous quarter.
The tech sector (.SPLRCT) continued to dominate buybacks with 28.2% of shares, although this was down from 31.6% in the second quarter of 2021. Buyouts in the financial sector increased from 21% to 26.4%.
While the share of buyouts for the tech sector was broadly in line with their weight of 27.6% of S & P’s total market value at the end of the third quarter, financials exceeded their weight, the market weight of sector n ‘being only 11.4%. .
“While companies have spent a record amount on share buybacks for the third quarter of 2021, their spending appears conservative when measured against their earnings and market value,” said Howard Silverblatt, senior analyst at indices at S&P Dow Jones Indices.
“In addition, the impact on the number of shares remains significantly lower compared to previous years, as rising share prices have reduced the number of shares that companies can buy back with their current expenses.”
Silverblatt also said that while companies are expected to increase their buyout spending in the fourth quarter and next year in part due to rising stock prices, that won’t be enough to impact the number of stocks.
NUVEEN END OF YEAR 2022 S&P 500 TARGET 5,100 (1200 EST / 1700 GMT)
Nuveen’s Equities Investment Council (EIC), led by Saira Malik, CIO, Head of Global Equities, has released its outlook for 2022.
According to Malik, the December FOMC meeting resulted in a much-anticipated policy change, which investors ultimately found baffling. At the same time, the Omicron variant remains a source of continued volatility.
That said, Malik believes the focus in 2022 could shift from monetary policy to fiscal policy. Although we now know that President Biden’s “Build Better” investment bill may have received a fatal blow. Read more
Anyway, here are some of the 2022 forecast from the Nuveen EIC:
** S&P 500 end of 2022 target of 5,100, roughly 11% above current levels (SPX currently up around 22% year-to-date)
** Preferred sector of the S&P 500: Energy
** Least favorite: basic products
** 10-year US Treasury yield 2022 end-of-year level: 2.0% (vs. ~ 1.48% currently)
** US GDP growth in 2022: 3.9%
** US CPI 2022: 2.75%
AS GAS PRICES RISE, NOK COULD OUTPERFORM FOR NOL (1048 EST / 1548 GMT)
The Norwegian crown may sparkle this Christmas as the
The currency is benefiting from soaring gas prices, positive seasonality and the recent Norwegian central bank rate hike, according to an ING analyst.
European and UK wholesale benchmark gas prices hit record highs on Tuesday, as Russian gas shipments to Germany via a major transit pipeline reversed course and colder weather increased demand.
This Christmas period “NOK could come across as the surprise outperformer thanks to soaring gas prices,” said Francesco Pesole, currency strategist at ING, in a note sent on Tuesday, adding that “the weather forecast suggests that the week of Christmas is expected to be particularly cold in Europe, which should also keep natural gas prices strong. ”
The koruna also benefits from positive seasonality, with oil-sensitive currencies generally having support during the New Year period, ING said. Additionally, “we believe NOK may also see some delayed benefits from Norges Bank’s December hike.”
Norway’s central bank raised its benchmark interest rate last week and said more hikes were likely next year, although that depends on the impact of an increase in coronavirus infections and the emergence of the Omicron variant. Read more
S&P 500 POP TT, BUT 50-DMA SAYS “NOT SO FAST!” (0955 EST / 1455 GMT)
Major Wall Street indices moved up early Tuesday, as strong quarterly earnings from Nike (NKE.N) and positive guidance from chipmaker Micron (MU.O) helped boost sentiment.
Unsurprisingly, given MU’s forecast, chip stocks are among the top performers. The Philadelphia SE Semiconductor (.SOX) index rose nearly 1.2%.
And with the 10-year U.S. Treasury yield now around 1.47%, and up more than 10 basis points from Monday’s 1.3530% low, banks (.SPXBK) are posting strong wins and value games (.IVX) outperform growth (.IGX).
With this, the main averages try to end a three-day losing streak. However, it should be noted that they are already retreating from their highs.
The S&P 500 (.SPX) peaked at 4,614.20 early on, which saw it flirt with its 50-day moving average, around 4,613. However, the benchmark has since fallen. sold back.
Here’s where the markets are at the start of trading:
INTERNAL MARKET MEASURES: BATTLE GIVES THANKS (9:00 AM EST / 1400 GMT)
A few measures of internal strength from the Nasdaq and the NYSE are sending mixed signals.
The Nasdaq Composite (.IXIC) closed Monday at its lowest level in more than two months. With that, the Nasdaq McClellan Summation (McSum), a measure of breadth / momentum based on rising and falling issues, ended at -5,084, a new low dating back to early April 2020. read the following
In contrast, the Nasdaq New High / New Low (NH / NL) index, a measure built around new annual highs and lows, was unchanged on Monday at 24.1%.
It should be noted that the Nasdaq NH / NL index hit a low of 12.5% on December 6, then recovered its 10-day moving average (DMA) on December 10. This short-term moving average has now risen and the measure itself shows bullish convergence with the IXIC.
Either way, traders will monitor the timing of these metrics. That is to say that the McSum begins to increase with the NH / NL index and recovers its 10-DMA, or the NH / NL index begins to fall again, in phase with the McSum.
With that, there could be greater confidence in the Nasdaq’s next major move.
Meanwhile, readings on the NYSE show a similar picture. On Monday, the NYSE McSum closed at its lowest level since April 2020. However, the NYSE NH / NL index, which also hit a low on December 6, is also above its rising 10-DMA. And the NYSE measure fell on Monday for the first time in 10 sessions. This as the NYSE Composite (.NYA) closed below its 200-DMA. Read more
FOR MARKET POSTS LIVE FROM TUESDAY BEFORE 0900 EST / 1400 GMT – CLICK HERE: find out more
Register now for FREE and unlimited access to Reuters.com
Terence Gabriel is a market analyst at Reuters. The opinions expressed are his
Our Standards: Thomson Reuters Trust Principles.