Last checked at 
* Dow, S&P 500, Nasdaq up >2%; smallcaps, transports ahead
* Every S&P sector green; financials up most
* Euro STOXX 600 index up ~1.8%
* Dlr up, crude, gold fall; U.S. 10-Yr Treasury yield ~1.45%
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
CRUISE LINER CAPITAL RAISES FLOOD THE ZONE (1320 EST/1820
GMT)
Cruise ship operators are quickly revisiting the capital
markets to boost liquidity as investors bet on a rebound from
the COVID-19 pandemic.
Early Monday, Royal Caribbean Cruises Ltd raised
about $1.54 billion for general corporate purposes after pricing
its equity offering at $91 per share. The capital
raise came a week after RCL recorded a 30% increase in new
bookings since the beginning of the year when compared to
November and December.
Cruise operator stocks were punished in 2020 as most trips
were canceled due to travel restrictions and the companies were
forced to raise cash to bolster their balance sheets to help
weather the pandemic.
On the heels of RCL's encouraging report last week, larger
rival Carnival Corp priced a $1 billion stock
deal.
And joining the ride, Norwegian Cruise Line Holdings early
Monday launched $1.1 billion offerings of senior notes
to fully repay two of its credit facilities, with the remainder
of net proceeds targeted for general corporate purposes.
.
In Monday afternoon trading, RCL shares were down 3.5% and
CCL shares were off 1.4%, while NCLH shares were up 0.1%. The
trio of stocks was up between 16%-22% to start 2021.
(Lance Tupper)
*****
GAMESTOP AND OTHER REDDIT FAVORITES MAKE FRESH RALLY (1250
EST/1750 GMT)
Shares of GameStop are making a fresh push on
Monday, up 7% at $109 as commmenters on Reddit's Wallstreetbets
hype the videogame retailer following a volatile surge and
selloff last week.
With the broader market rallying on upbeat developments in
vaccines and fiscal stimulus, several stocks popular on
Wallstreetbets also surged. AMC Entertainment jumped
11%, Koss rallied 7% and U.S. shares of Blackberry
rose 8%. All of those stocks were off earlier
highs, with GameStop at one point up almost 18%.
A daily GameStop discussion thread https://www.reddit.com/r/wallstreetbets/comments/lv7ahq/gme_daily_thread_march_1_2021
on Wallstreetbets had about 26,000 comments, and all those
reviewed by Reuters were bullish.
GameStop is up about 150% from last Tuesday, when the co
said Chief Financial Officer Jim Bell would step down. It is up
almost 500% since Jan 11, when the co agreed with Chewy.com
founder Ryan Cohen's RC Ventures LLC to add Cohen and two other
e-commerce veterans to its board.
(Noel Randewich)
*****
WITH RATES RISING, EARNINGS GROWTH KEY FOR S&P (1135
EST/1635 GMT)
Expect earnings growth to play a larger role than valuation
expansion for S&P 500 returns as interest rates rise,
Goldman Sachs strategists wrote in a note Monday.
"We believe higher interest rates will be offset by a lower
equity risk premium, leaving earnings growth, rather than
valuation expansion, as a key driver of returns," they wrote.
Faster economic growth and elevated operating leverage will
drive positive revisions to consensus and margins estimates in
earnings, according to the strategists, who said they recently
raised their 2021 S&P 500 EPS estimates following
stronger-than-expected fourth-quarter earnings.
They now expect S&P 500 earnings to have dropped 13% in 2020
and to grow 27% in 2021 to $181.
"If realized, 2021 EPS would be 10% higher than the
pre-pandemic 2019 level of $165."
The earnings recovery will be uneven across sectors, they
noted, with cyclical sectors most affected by the pandemic
"likely to deliver the fastest growth in 2021," they wrote.
Also, they noted that after 2021, "the primary risk to 2022
EPS is corporate tax reform," given that U.S. President Joe
Biden has already called for "an increase in the statutory
federal corporate tax rate."
(Caroline Valetkevitch)
*****
MARCH COMES IN LIKE A LION: PMI, CONSTRUCTION SPENDING (1103
EST/1603 GMT)
Data released on Monday signaled the recovery is gaining
momentum as an uneven rebound from the global health crisis
continues to shovel coal into the U.S. economic engine despite
lingering headwinds.
U.S. factories accelerated their recovery in February,
expanding at the fastest pace seen in three years.
Institute for Supply Management (ISM) purchasing managers'
index (PMI) delivered a reading of 60.8, a 2.1 point
increase from January and healthier than the more languid
projected gain of 0.1 point.
A PMI reading above 50 signifies increased activity over the
previous month.
"Production expanded vigorously, and new orders signal
strong activity in the pipeline," writes Oren Klachkin, lead
U.S. economist at Oxford Economics. "Factory activity would have
been stronger were it not for enduring supply chain and
logistical challenges that slowed supplier deliveries, dragged
on inventories, and raised input costs."
Indeed, tight supply caused by hobbled supply chains
continues to drive up production costs.
The 'prices paid' component vaulted 5.9 points to 86.0, its
highest level since July 2008.
The survey's respondents are feeling the supply pinch:
"A sense of urgency is being felt regarding new orders.
Customers are giving an impression that a presence of stability
is forthcoming and order flow is increasing," (textiles).
"Supply chains are depleted; inventories up and down the
supply chain (is) empty," (chemicals).
Things are now out of control. Everything is a mess, and we
are seeing wide-scale shortages," (electrical
equipment/appliances).
Global financial information firm IHS Markit also released
its take on February PMI, which came in at a less
robust 58.6.
"Another month of strong production growth suggests that the
US manufacturing sector is close to fully recovering the output
lost to the pandemic last year," writes Chris Williamson, Chief
Business Economist at IHS Markit.
But Markit also notes the looming specter of higher prices.
"A concern is that shortages of raw materials have become a
growing problem, with record supply chain delays reported in
February, contributing to the steepest rise in material costs
seen over the past decade," Williamson adds. "Prices charged for
a wide variety of goods coming out of factories are consequently
rising, which will likely feed through to higher consumer
inflation."
ISM and Markit PMI differ in the weight given to the various
subcomponents, such as new orders, etc.
The graphic below shows the degree to which the two indexes
agree/disagree.
Finally, a report from the Commerce Department showed
expenditures on U.S. construction projects jumped
by 1.7% to a record high in January, blowing past the 0.8%
consensus and building on December's 1.1% increase.
Residential construction once again provided the biggest
boost, jumping 2.5% from the previous month and soaring by 21%
year-on-year, as spiking demand and record low supply continues
to throw homebuilding into overdrive.
"Overall, construction spending is being supported by
residential activity, in particular single-family construction,
reflecting tight inventories," says Rubeela Farooqi, chief U.S.
economist at High Frequency Economics. "The January level of
residential is 26.5% SAAR above the fourth quarter average."
The momentum appeared to be contagious.
All three U.S. stock indexes were sharply higher as risk
appetite returned with a vengeance. Economically-sensitive
small-caps and transports were ahead of the pack.
(Stephen Culp)
*****
WALL ST UP MORE THAN 1% EARLY; VACCINE NEWS A POSITIVE (1001
EST/1501 GMT)
U.S. stocks were up more than 1% in early New York trading
Monday, helped by optimism over news that Johnson & Johnson
became the third authorized COVID-19 vaccine in the
United States and has begun to ship its single-dose shot
vaccine.
Also boosting stocks, bond prices edged up after a
month-long selloff and yields eased.
All 11 S&P 500 sectors were higher, led by energy.
JNJ shares are up about 1.7%, and travel-related firms are
on the rise.
Investors also cheered the House of Representatives' passage
of U.S. President Joe Biden of his $1.9 trillion coronavirus
relief package early Saturday. The bill now moves to the Senate.
Here is the early market snapshot.
(Caroline Valetkevitch)
*****
SMALL CAPS BATTLING SOME BIG BARRIERS (0900 EST/1400 GMT)
The small-cap Russell 2000 is up 5-straight months,
and 10 of the past 11 months. In fact, the index is up 91% off
its March 2020 close, which is its biggest rolling 11-month
advance in its history.
That said, the RUT nearly hit a long-scale monthly channel
resistance line in February, and then backed away:
On February 10, the RUT reached as high as 2,318, putting it
just 1% shy of the channel barrier around 2,345. Since then, the
index is down 5%, to a 2,201 close on Friday. The channel line
ascends to around 2,365 in March.
Meanwhile, since its March 2020 trough, the RUT has seen a
massive snapback in its relative performance vs the large-cap
Dow Jones Industrial Average. After falling to a 17-year
low last March, the RUT/DJI ratio has now risen to 6-year high
at 7.12%.
However, since 1988, this ratio has struggled much beyond
7.0%, with its highs between 7.12% and 7.25%. Additionally, a
broken support line from 1999, which is now resistance, is
another hurdle coinciding with levels just over 7%.
Therefore, the RUT appears to be at an important juncture as
it attempts to continue its advance, while sustaining its recent
outperformance vs the large-cap Dow.
In any event, given its recent leadership role, a greater
RUT downturn may coincide with increasing overall market
weakness.
(Terence Gabriel)
*****
FOR MONDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:
(Terence Gabriel and Lance Tupper are Reuters market analysts.
The views expressed are their own)
