* Major U.S. indexes rebound; Nasdaq up >1%
* Energy leads S&P 500 sector gainers; utilities weakest
* Dollar down; gold, crude, bitcoin green
* U.S. 10-Year Treasury yield edges up to ~1.77%
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UTILITIES LIGHT UP WITH A BRIGHT-GREEN HUE (1215 EST/1715
The growth outlook for the utilities' sector remains bright
according to Saira Malik, CIO, head of global equities at
As Malik sees it, valuations in the sector look attractive
even after the group's nearly 18% advance in 2021, a gain that
was its third-highest in the past decade. She says the sector is
currently priced at around a 10% discount to the S&P 500 Index,
based on estimated 2022 earnings per share.
But for Mailk, the investment potential goes beyond relative
valuations. This because she says most utility conglomerates
have streamlined their operations, "turning into pure-play
regulated utilities – which investors typically prefer due to
the stability and predictability of earnings that these
Meanwhile, she believes that the landscape for capital
expenditure within the group "is as vibrant as ever," with
opportunities to invest in energy transmission, system
reliability and modernization.
However, for Malik, the most compelling rationale for the
sector may be the near across-the-board effort by its
constituent companies to reduce greenhouse gas emissions by
steadily retiring high carbon-emitting (e.g., coal-fired) power
plants and investing in green alternatives such as wind and
"These offer lower construction and operating costs while
also helping combat climate change. As renewable power plants
grow in number, so does the regulated asset base for the
companies that run them. Shareholders, in turn, should benefit
from the substantial and predictable earnings growth fueled by
this industry-wide decarbonization."
EUROPEAN TECH SNAPS 7-DAY LOSING STREAK (1158 EST/1658 GMT)
These days have been all about rate-hike angst and even
though Powell said the Fed would likely raise rates this year,
some confidence finally returned to markets, helping European
tech stocks rise for the first time this year.
The region's tech index stood out with a 2% bounce
that ended seven-straight negative sessions - the longest losing
streak since September - during which it lost almost 8%.
Their gains helped the pan-European STOXX 600 benchmark
rise 0.8% at the close in a broad based bounce that saw most
sectors including oil, travel and pharma positing decent gains.
SMALL BUSINESS SENTIMENT TURNS LESS SOUR (1055 EST/1555 GMT)
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.
VALUE-GROWTH ROTATION BATTLE ON WALL STREET (1015 EST/1515
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:
NASDAQ COMPOSITE: WORN TO A FRAZZLE? (0900 EST/1400 GMT)
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.
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(Reporting by Terence Gabriel)