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LIVE MARKETS-Small business sentiment turns less sour

Tue, 11th Jan 2022 15:47

* S&P 500, DJI, Nasdaq dip; FANGs up, transports weak

* Real estate weakest major S&P 500 sector; energy leads

* Euro STOXX 600 index rallies ~0.8%

* Dollar, bitcoin down; gold, crude green

* U.S. 10-Year Treasury yield rises to ~1.77%

Jan 11 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com

Small business owners grew a tad more sanguine last month at the
finishing line of a challenging year fraught with pandemic,
inflation and a labor drought.

The National Federation of Independent Business' (NFIB)
Optimism index edged up half a point to 98.9 in
December, with survey respondents reporting inflation is now the
biggest thorn in their sides.

"Small businesses unfortunately saw a disappointing December
jobs report, with staffing issues continuing to impact their
ability to be fully productive," writes Bill Dunkelberg, NFIB's
chief economist. "Inflation is at the highest level since the
1980s and is having an overwhelming impact on owners' ability to
manage their businesses."

Still, improved capital outlays and higher reported/expected
sales helped the headline number grow higher, as did growing
inventories - a hopeful sign that the pandemic-stricken supply
chain could be untangling (a notion supported by recent ISM PMI

But the worker shortage persists, with reported compensation
and those citing labor costs as their top business problem both
rose to 48-year record highs.

"That sounds dramatic," says Ian Shepherdson, chief
economist at Pantheon Macroeconomics. "(But) it just represents
a catch-up to the surge already reported in ECI private sector
wages and salaries."

"The labor market clearly is extremely tight, but it is not
necessarily still tightening," Shepherdson adds. "The
jobs-hard-to-fill measure peaked back in September, though it
remains extremely high."

It's worth noting that the NFIB is a politically active
membership organization, and its optimism index - which hit a
post-pandemic low the month President Joe Biden was inaugurated
- still remains well below pre-COVID levels.

Wall Street traded lower as Federal Reserve Chairman Jerome
Powell took his seat at a congressional hearing, which is sure
to address rising inflation concerns as reflected in the NFIB

Cyclicals and economically sensitive transports were
down the most.

(Stephen Culp)



Wall Street opened lower on Tuesday, but underneath, an
ongoing rotation was occurring as value stocks battled to
outperform growth shares.

Growth poster-child Information technology
accounted for the largest portion of the S&P 500's decline, with
value-oriented energy among the few sectors showing

The market is grappling with a broad-based rotation and the
potential for a hastened pace of rate hikes, which is leading to
volatility, according to Greg Marcus, managing director at UBS
Private Wealth Management in Washington.

The sector rotation presents an opportunity to reposition
and put cash to work in sectors exposed to reopening trends,
such as energy, consumer discretionary and financials, he said.

Value stocks, as measured by the S&P Value index,
have been outperforming their growth counterpart since
the end of November, and are up 7.6% versus a 2.0% decline.

Since the beginning of the year, value is up 0.7% versus a
4.3% decline in growth.

On Tuesday so far, value is now off 0.34% versus a 0.17%
decline in growth.

Here is an early snapshot:

(Herbert Lash)



At one point Monday, the Nasdaq Composite was down
more than 10% in just seven weeks from its late November record
intraday peak just before an upward reversal that saw the
tech-laden index close slightly higher on the day.

With this, one measure of internal strength is suggesting
the tech-laden index may be washed-out, and ripe for a bigger

The 10-week moving average (WMA) of the Nasdaq
advance/decline (A/D) ratio, has plunged to 82%, or its
lowest level since an 81% reading in early July 2010. That 2010
low marked the end of a near 20% nine-week slide in the index.

In 2011, this measure bottomed in early September at 83%. It
then converged into the Composite's early October trough. The
IXIC fell around 7% more over the final four weeks of what would
become a 20%, 22-week decline.

Two additional near 20% sell-offs then ended in summer 2015
and early 2016, lasting five and 10 weeks, saw this measure
bottom at 88% and 87%.

More recently, after a 24%, 17-week swoon that concluded in
late December 2018, this measure bottomed at 84%. Then in early
2020, in the wake of a near-33%, five-week, collapse, this
measure became washed out at 84%.

The fact that the 10 WMA of the A/D ratio is already as low
as it is after an IXIC drop of only around 10% is a testament to
just how weak the broader Nasdaq has been. The Nasdaq daily A/D
line topped in February 2021, and ended Monday at a 16-month

It now remains to be seen where the 10 WMA of the Nasdaq A/D
ratio will end the week. Of note, in 2008, in the depths of the
Great Financial Crisis, it fell as much as 68% in November,
before converging into the Composite's March 2009 low.

(Terence Gabriel)



(Reporting by Terence Gabriel)

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