Last checked at 
* Main U.S. close sharply lower, Nasdaq down most
* Energy biggest loser among S&P sectors; real estate gains
most
* Dollar, gold edge up; crude off, bitcoin drops >7%
* U.S. 10-Year Treasury yield falls to ~1.42%
Dec 13 - 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
WALL STREET TURNS RED AHEAD OF FED (1605 EST/2105 GMT)
Wall Street slid on Monday, with the S&P 500 backing down
from Friday's record closing high to end a session in which
there was little to distract investors from Omicron jitters and
the increasing likelihood of the Federal Reserve shortening its
policy timeline.
All three major stock indexes closed lower with megacap
tech-plus weighing heaviest.
Of the 11 major sectors in the S&P 500 the biggest winner -
real estate - and the biggest loser - energy -
also appear on track to be the best-performing sectors of the
year, with energy shares last up more than 46% year-to-date and
real estate most recently showing a 36% advance over the same
time period.
Shares of Apple Inc dropped 2.1% just as the iPhone
maker's market cap approached the $3 trillion mark.
New infections of the Omicron COVID variant rained on the
travel industry's parade.
Cruise operators sank: Carnival Corp, Norwegian
Cruise Line Holdings and Royal Caribbean Cruises
all dropped more than 4%.
Airlines lost altitude: the S&P 1500 airlines index
dipped 3.9%.
So-called "meme stocks," or stocks that enjoyed
nosebleed-inducing rallies driven by retail investors this year
due to social media buzz, lost ground.
GameStop Inc, and AMC Entertainment lost
13.9% and 15.3% respectively, while retail trading app Robinhood
Markets Inc ended the session down 2.1% after touching
its lowest level since its debut as a publicly traded company.
Members of the FOMC are expected launch their two-day
monetary policy pow-wow on Tuesday, and in view of persistently
hot inflation readings and the ongoing stabilization of the
labor market, the question appears to have moved beyond "will
they" to "how quickly will they" taper asset purchases and hike
key interest rates.
While Powell & Company are the week's headliners, some data
is likely to also grab some attention. This includes inflation
(PPI, import prices), retail sales and industrial indicators
(industrial output, Empire State, Philly Fed, Markit PMI) which
are expected to provide a clearer picture of the economic
recovery as a volatile year lumbers toward the finish line.
Here's your closing snapshot:
(Stephen Culp)
*****
DIVIDEND STOCKS: STABILITY IN AN UNSTABLE MARKET (1349
EST/1849 GMT)
The Nuveen Equities Investment Council, led by Saira Malik,
is out with a note discussing dividend stocks.
Dividend stocks have performed well this year, as strong
corporate earnings growth drove broader equity market
participation.
In fact, Malik says that within the S&P 500, dividend-paying
companies have not only outperformed non-dividend payers, but
they’ve also provided excess returns during spikes in
volatility.
With elevated uncertainty over inflation and interest rates,
Nuveen expects volatility to continue to dog the market.
"In our view, investors should favor dividends supported by
healthy fundamentals, balance sheet strength, free cash flow and
attractive relative valuations. Companies with these
characteristics appear positioned to benefit from the
reacceleration of economic growth, allowing them to return
capital to shareholders."
Malik believes that the trend of reinstatement of capital
return programs should continue, adding that share repurchases
and dividends have returned to near pre-pandemic levels,
bolstered by earnings growth, margin expansion and greater
confidence in the sustainability of the economic recovery.
According to Malik, more than 300 S&P 500 constituents have
declared a dividend increase so far this year, with the index
expected to generate 6% dividend growth in 2021.
While dividend increases are occurring broadly, Malik says
that cyclical areas like industrials and financials have
declared the most. However, given a strong earnings growth
environment, she also believes sectors with lower dividend
payout ratios such as tech, health care and consumer
discretionary, should also deliver dividend growth.
(Terence Gabriel)
*****
GEOPOLITICS 2022: "MANAGED DISAGREEMENTS" (1223 EST/1723
GMT)
Joe Biden moving into the White House might have made
geopolitics somewhat calmer and more predictable, with much of
the focus shifting from international politics to fundamental
economic issues including inflation, monetary policy dilemmas,
supply-chain disruptions, and the pandemic.
But that doesn't mean geopolitical tensions have gone away,
says Philippe Dauba-Pantanacce, global geopolitical strategist
at Standard Chartered Bank.
Top of the list for 2022 remains the relationship between
China and the U.S. and other Western powers and allies, which
has "evolved from a commercial confrontation into a broader
adversarial relationship where disagreements are managed rather
than resolved", said Dauba-Pantanacce.
And then there are some persistent idiosyncratic risks,
which in some cases, are rising with Turkey, Russia and Latin
America all on the radar.
"Russia's regular confrontations with the U.S. and Europe
are likely to continue to act as a destabilizing force,"
Dauba-Pantanacce predicts.
Europe’s energy crisis this autumn gave Russia's President
Vladimir Putin an opportunity to demonstrate Russia's importance
on the global stage and provided a wake up call of the need for
the region to diversify energy sources.
"This, combined with the migrant crisis on the EU-Belarus
border and the Russian military build-up on the Ukraine border,
has increased the likelihood of further confrontation,"
Dauba-Pantanacce said.
(Karin Strohecker)
*****
THE CHAMPAGNE'S GONE FLAT: WORLD BUSINESS SENTIMENT TURNS
GLOOMY (1145 EST/1645 GMT)
As companies worldwide prepare to shut the books on a year
that was supposed to tell a story of economic rebound from the
global health crisis brought about by COVID, the mood is dimmer
than markets might have assumed when they were tossing confetti
and singing 'Auld Lang Syne' nearly twelve months ago.
Since then, we've added the unwelcome words 'Delta' and
'Omicron' to our daily vocabularies, digested the notion that
the coronavirus could be here to stay, and struggled to get our
arms around a tangled, systemic, worldwide supply chain fiasco.
Oxford Economics' (OE) most recent Global Risk Survey which
included 120 responses from November 29 through December 9,
showed business sentiment turning pessimistic for the first time
since the height of the pandemic.
"Our December flash survey finds that 61% of businesses have
become more negative about global economic growth prospects over
the past month," writes Jamie Thompson, OE's head of macro
scenarios. "Concerns over the risks posed by supply-chain
disruption and the new Omicron virus variant are evident
throughout the latest survey."
As to when the current not-so-transitory wave of consumer
price inflation will peak, the majority of the survey
participants see it happening in the first quarter (36%) or
second quarter (26%) of 2022.
For a breakdown of inflation expectations, please see the
graphic below, courtesy of OE:
Inflation has been sent into orbit by supply scarcity, a
sticky problem which a sizeable chunk of the respondents see
persisting throughout the coming year and into 2023.
"Half of the respondents report that their business is
currently being affected by the supply-chain crisis, such as
material and component shortages and transportation
bottlenecks," Thomson adds. "Around 30% of those affected report
being severely affected. Few expect an early end to disruption,
and almost 1-in-5 businesses (19%) now expect disruption to
their business to persist beyond 2022."
(Stephen Culp)
*****
TOO EARLY TO ESTIMATE TORNADO INSURANCE CLAIMS (1105
EST/1605 GMT)
As U.S. mid-west residents and businesses dealt with the
aftermath of a series of deadly tornados that killed at least a
100 people on Friday night, Piper Sandler analyst Paul Newsome
looked at the market share of insurance companies in the area
affected.
While Newsome noted that it was too early to estimate the
amount of claims insurers would receive he noted that the
catastrophe was unusual as tornados rarely hit in December and
when they do they tend to affect a smaller geographic area for a
shorter period of time.
He noted that the tornado outbreak, which moved across
multiple states including Arkansas, Illinois, Missouri,
Tennessee and Kentucky. In Kentucky, Governor Andy Beshear
estimated the death toll at 80 and talked about one twister that
tore across 227 miles (365 km) of terrain, almost all of which
was in Kentucky.
So Newsome noted that while tornadoes can typically result
in hundreds of millions of dollars worth of claims, "this could
be a lot more."
While the event was usual, Newsome suggested that it may be
another data point indicating that increasingly unpredictable
and unusual weather event may now be a permanent issue that
insurance investors must consider.
U.S. President Joe Biden said on Saturday it was likely to
be one of the largest Tornado outbreaks in U.S. history and that
he would ask the Environmental Protection Agency and others to
take a look at whether climate change was a factor.
Looking at 2020 data for auto, commercial, home owner and
auto passenger insurance, the analyst estimated that State Farm
has the biggest exposure to the affected states with 22% share
of the market followed by Allstate Corp at 8%, Liberty
Mutual at 5.2%, Progressive at 4.7% and Farmers
insurance at 4.6%.
While Newsome estimated the Cincinnati Insurance Co
share of the market at just 1.4% that stock was one of lead
decliners in the S&P 500 financial index. its shares
were down more than 2%. Shares in Allstate were last down more
than 1% while Progressive was up 0.5%.
Travelers, which has an estimated 3.7% share of the
market was down 0.9%. Chubb was down about 1.4% along
with Hartford Financial, which has a 1.5% share. Newsome
put Sate Auto's share of that market at 0.8% and the
stock was virtually unchanged on Monday.
(Sinéad Carew)
*****
WALL STREET HITS THE SLOPES AFTER HINT OF A LIFT (0958
EST/1458 GMT)
After stock futures hinted at a pale green start to the
week, Wall Street defied those expectations on Monday by heading
lower after the opening bell.
The three major U.S. stock indexes appeared to be cooling
their heels after S&P 500 hit a record closing high on Friday
and notched its best biggest weekly percentage gain since
February
Tesla Inc, Microsoft Corp and Amazon.com
weighed heaviest, with Apple Inc bucking
megacap tech-plus trend following a target price hike from
JPMorgan.
The gadget maker hit an new intraday high and is on the
brink of becoming the only company in the world to have crossed
the $3 trillion market value mark.
The Federal Reserve is expected to convene tomorrow for its
two-day meeting, and its concluding statement and Q&A will be
scrutinized for clues as to the extent to which the central bank
will shorten the timeline of expected tightening of its
accommodative monetary policy.
Powell & company will most certainly be talking about
inflation, which continues to sizzle, as evidences by Friday's
hot CPI reading which showed the highest annual headline
increase in nearly four decades.
Here's your opening snapshot:
(Stephen Culp)
*****
NASDAQ COMPOSITE: STOKING THE FURNACE? (0900 EST/1400 GMT)
Despite less than stellar breadth readings on Friday along
with the S&P 500's fresh record-high close,
the Nasdaq New High/New Low (NH/NL) index, has made a
constructive turn:
This measure of internal strength may have become
sufficiently washed out with the Nasdaq's recent
weakness. After falling to 12.5% on December 6,
which was its lowest reading since early-April 2020, the NH/NL
index has now risen four-straight days.
In so doing, this measure ended Friday at 21.1% which put it
above its descending 10-day moving average, at 19.5%, for the
first time since November 12.
It now remains to be seen if last week's sharp NH/NL index
upturn from especially depressed levels will lead to the broader
Nasdaq re-heating, and therefore, fuel a more sustained IXIC
rise. Indeed, there certainly is room for the NH/NL index to
rise before it will encounter resistance lines from its highs
earlier this year. The measure's early November peak was at
75.7%.
Of note, current readings on the NYSE show a similar picture
as the Nasdaq. After also falling to its lowest level since
early-April 2020, the NYSE's measure also ended Friday above its
10-DMA.
A Nasdaq NH/NL index violation of its Dec. 6 low can open
the door for a test of its March 2020 trough at 1.2%, something
which could put the IXIC on ice.
(Terence Gabriel)
*****
FOR MONDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
