* U.S. stocks lower; chips, Nasdaq lead declines
* Cons disc weakest major S&P 500 sector; energy up most
* Nov UMich sentiment > estimate; Oct New Home sales <
* Euro STOXX 600 index down ~0.1%
* Dollar up; bitcoin, gold down; crude flat
* U.S. 10-Year Treasury yield rises to ~1.68%
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WALL STREET FALLS WITH DISCRETIONARY WEAKNESS (1010 EST/1510
U.S. stocks are lower in early Wednesday trading, with
consumer discretionary leading sector declines in the S&P 500
following some disappointing results from retailers including
Gap shares are down more than 22% in early trading, while
Nordstrom is down more than 27%, also following
quarterly results. The discretionary index is off about 0.6%
Nordstrom said labor costs pinched its quarterly profit and
warned of product shortages at its off-price stores heading into
the holiday season.
BOFA SETS 4,600 TARGET FOR S&P 500, DRAWS PARALLEL TO 2000
(0911 EST/1411 GMT)
BofA Global Research set a 4,600 target for the S&P 500 at
year-end 2022 and compared this year's market exuberance shown
in retail trading mania and frenzied IPO activity to the market
activity in 2000 in its U.S. equity outlook note.
"There are too many similarities between today and 1999/2000
to ignore," wrote a group of strategists led by Savita
Subramanian, further noting that one out of four of the IPOs of
1999 are today's blue chips.
The PT implies around 2% downside to S&P 500's last
closing price of 4,690.70 as strategists said rising wage growth
is one of the biggest headwinds for companies heading into the
They add that the 'TINA' (there is no alternative) argument
for equities would be less compelling if cash yields rival the
current S&P 500 dividend yield of 1.3%, and if the 10-year U.S.
Treasury yield rises to 2% by 2022-end, as BofA rates
strategists have predicted.
Strategists prefer to stick with small caps and expect the
group to outperform large caps at least in H1 2022.
Among S&P sectors, BofA is overweight energy and
financials that offer inflation-protected yield as well
as healthcare, and underweight communication services
, consumer staples and consumer
Here's a look at some of the top Wall Street analysts'
outlook for U.S. stocks in 2022.
NASDAQ COMPOSITE: CAN'T CATCH ITS "BREADTH" (0900 EST/1400
The Nasdaq Composite is only down around 1.8% from
its Nov. 19 record-high close. That said, measures of internal
strength continue to show broad, and intensifying, weakness.
For example, the Nasdaq daily advance/decline (A/D) line
topped on Feb. 9 of this year, before ultimately collapsing to a
9-month low in mid-August:
Despite, IXIC new highs since then, including just late last
week, this closely watched breadth measure remains well shy of
its 2021 highs. Earlier this month, it failed to reclaim its
200-day moving average.
So far this year, there have been 39 negative breadth days.
That is, the Composite closed higher, but the A/D line fell that
day. Of note, around 15% of those days have occurred in just the
past 30 days or so, suggesting recent internal tension.
Also, of those 39 negative breadth days, 16 of them occurred
with the composite registering a record close. Three of them
have occurred in November, with the last such day Nov. 19, or
what is now the Composite's 16,057.44 record close.
Just looking back to early 2020, periods of A/D-line
divergence vs the Composite, as well as nearby clusters of
Nasdaq record-high closes/negative breadth days, did precede
varying degrees of IXIC instability.
Additionally, the A/D line has now fallen seven-straight
days and is threatening its August trough. A break below this
level will put it at a more than one-year low.
Therefore, unless the Nasdaq can quickly catch its
"breadth," risk remains for a much deeper decline from the
FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)