Last checked at 
* Major U.S. indexes down, but off worst levels; Dow hit
hardest
* All major S&P sectors red: energy slides >2.6%
* Dollar, gold down slightly, crude edges higher
* U.S. 10-Year Treasury yield ~1.62%
May 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
HANESBRANDS LEADS TUMBLE IN RETAILERS (1230 EDT/1630 EDT)
Retailers are among some of the biggest percentage decliners
in the S&P 500 on Tuesday, led by a more than 14% tumble in
HanesBrands, and following falls in the broader market
tied to worries over rising inflation.
The drop in HanesBrands' stock followed its disappointing
outlook, while the S&P 500 is down 1.1%.
HanesBrands also unveiled a three-year
growth plan.
More retailers are expected to report results in the coming
weeks, including Casper Sleep this week, and Macy's
, Home Depot and Target next week.
Among other big decliners in retail on Tuesday are Ulta
Beauty, down 4.4%%; L Brands, down 4.6%; and Gap
Inc, down 2.8%.
The SPDR S&P Retail ETF is sliding around 2.2% on
the day.
(Caroline Valetkevitch)
*****
BMO'S BELSKI BUMPS UP 2021 TARGETS FOR S&P 500 AND EPS (1209
EDT/1609 GMT)
BMO Capital Markets has bumped up its 2021 targets for the
S&P 500 and earnings growth.
Chief Investment Strategist Brian Belski said in a report on
Tuesday he now expects 2021 S&P 500 EPS to reach $190, up 8.6%
from his previous target of $175. As a result, BMO is raising
its 2021 S&P 500 target to 4,500 from 4,200.
The new target is about 8% higher than the S&P 500 at midday
on Tuesday, with the benchmark tumbling almost 1% as investors
worry that rising inflation could push the Federal Reserve to
tighten monetary policy faster than expected.
Belski said the upgraded EPS target was the result of a Q1
earnings season that soundly beat expectations.
"It has become quite clear to us that our original 2021 EPS
is likely too low despite being on the higher end of forecasts
among strategists when we initiated it back in November. This
has become particularly true as of late as analysts continue to
raise annual EPS estimates for companies," Belski wrote.
In the same report, BMO upgraded the energy sector to
"market weight" from "underweight", saying forecasts for oil
prices have improved as the economy recovers from the pandemic.
BMO also downgraded consumer staples to "underweight" from
"market weight", pointing to rising commodity prices that could
hurt companies earnings.
(Noel Randewich)
*****
EUROPE'S WORST SESSION SINCE DECEMBER (1159 EDT/1559 GMT)
Well inflation may be the dog that doesn't bark, but it sure
can bite.
The pan-European STOXX 600 had its worst day since December,
losing about 2.1% as traders fear inflation is actually getting
real.
In the grand scheme of things though, European equities are
just about 10 points from yesterday's record high of 446.2
points.
While one would expect tech to get the worst hit, the
sector's losses were bang in line with the broader market and
it's the travel and leisure segment which lies in a pool of red.
The index lost 5.9%, dragged down by British Airways-owner
IAG, down 7.4%. Investors didn't exactly welcome its
plans to $1 billion through a convertible bond to strengthen its
balance sheet.
As noted by Josh Mahony at IG, there seems to be more depth
to negative sentiment than just selling growth stocks as
government bond yields tick up.
"While yesterday’s US selloff was geared heavily towards
those high P/E growth names, today has seen traders take on a
more indiscriminate risk-off approach", he wrote in his closing
note.
(Julien Ponthus)
*****
RELATIVE VALUATIONS FAVOR EMERGING MARKETS (1127 EDT/1527
GMT)
Saira Malik, CIO, Head of Global Equities at Nuveen, is out
this week with some thoughts on emerging markets.
According to Malik, though global equities may appear
overvalued historically, relative valuations appear to favor
emerging markets. In fact, she says EM equities are currently
trading at a 25% discount compared with their historical
relationship to U.S. equities.
Malik says a number of important tailwinds reinforce this
point including strong growth in China, a weaker U.S. dollar,
possible geopolitical improvements, and a widening growth gap
with EM earnings per share 10% higher than in the U.S.
Her bottom line is that although several EM countries
continue to struggle with the pandemic, she is optimistic that
the global economy will eventually follow a similar path to
recovery as the U.S.
As a result, she believes "this is a good time for investors
to consider evaluating their exposure to emerging market
equities given their solid prospects."
(Terence Gabriel)
*****
A FIRST FOR THE FALKLANDS (1111 EDT/1511 GMT)
Nearly 300 miles off the southeast tip of South America and
with a population of just 2,563, the Falkland Islands has just
got its first ever sovereign credit rating.
The territory, which is also claimed by Argentina as the
Malvinas, had almost no debt until last year, but now it wants
to tap borrowing markets to fund improvements to its main port
in Stanley (population 2115).
It makes sense. Fishing is half of the Falklands $300
million-a-year economy and there are hopes that oil and gas
exploration and tourism which had been driving 11% a year
growth, and also rely on boats, will power it going forward.
So what rating does such a remote part of the world deserve?
A respectable 'investment grade' A+ according to S&P. That puts
it in line with both China and Japan and though it is two
notches below Britain's score, it is 12 notches above
Argentina's CCC+ after it suffered a record ninth sovereign
default last year.
(Marc Jones)
*****
NOW HIRING - CUE THE CRICKETS: JOLTS, NFIB (1052 EDT/1452
GMT)
Data released on Tuesday added to growing evidence that a
worker shortage is standing in the way of the labor market's
recovery.
The Labor Department released its March Job Openings and
Labor Turnover Survey (JOLTS), which gauges labor
market churn.
The report showed job openings reached 8.123 million in
March - a record high - handily outpacing new hires. This, along
with a drop in layoffs/discharges, suggest a tightening labor
market.
Job quits inched higher. The quit rate is seen as a
yardstick of consumer expectations, as workers are unlikely to
walk away from a gig in times of economic uncertainty.
With demand booming as the economy reopens, the worker
shortage, combined with an ongoing supply drought, appear
destined to culminate in spiking inflation, which the Fed is
quick to reassure will be only temporary.
Tomorrow's CPI report from the Labor Department will provide
further inflation clues.
The outlook of small businesses owners grew more optimistic
in April, but their inability to fill job openings reached a
record high.
The National Federation of Independent Businesses' (NFIB)
Small Business Optimism Index gained 1.6 points to
a reading of 99.8 in April, the highest level since the
presidential election, with eight of the 10 components
improving.
"Business owners now are responding to the huge progress on
defeating Covid and the subsequent reopening of the economy,"
says Ian Shepherdson, chief economist at Pantheon
Macroeconomics. "On the downside, we're baffled by the
seven-point drop in the economic expectations index, which
stands at a depressed -15. That looks far too gloomy."
Echoing Friday's disappointing employment report NFIB survey
respondents also suggests a labor shortage.
"Finding qualified employees remains the biggest challenge
for small businesses and is slowing economic growth," says Bill
Dunkelberg, chief economist at NFIB. "Owners are raising
compensation, offering bonuses and benefits to attract the right
employees."
It should be noted that the NFIB is a politically active
membership organization, and "the NFIB membership - or at least,
the members who respond to the survey - skews heavily
Republican," as Shepherdson points out.
Investors are in a selling mood in morning trading. All
three major U.S. stock indexes are down more than 1%.
(Stephen Culp)
*****
COINBASE MAY SLIDE AS RESULTS LIKELY TO MISS - NEW
CONSTRUCTS (1026 EDT/1426 GMT)
Coinbase Global Inc, the platform for trading
cryptocurrencies, could tumble further after it releases results
on Thursday as the company comes up short on future profit
expectations, warns New Constructs in a research note.
Coinbase, which is trading around $285 a share, is unlikely
to report news from its first-quarter results that would justify
owning shares at current levels, said David Trainer, chief
executive of New Constructs.
Coinbase's valuation implies it will exceed the combined
revenue of New York Stock Exchange operator Intercontinental
Exchange Inc and Nasdaq Inc, Trainer said.
Investors should expect the stock, down more than 30% from
its peak of $429.54 on April 14 - Coinbase's first date of
trading as a public company - to continue to underperform
further and its share price could fall to $100.
Coinbase is not likely to fulfil the profit expectations
baked into the stock's current valuation of $58 billion. Rising
competition should reduce Coinbase’s market share and pricing
power as revenue and profits at the company taper off, according
to New Constructs.
"We believe the stock has more downside risk ahead," Trainer
said.
(Herbert Lash)
*****
U.S. STOCKS TAKE EARLY HIT, BUT BOB AND WEAVE OFF LOWS (1000
EDT/1400 GMT)
Major U.S. indexes took stinging opening hits on Tuesday,
amid concerns over lofty valuations and inflation.
Of note, the NYSE's opening tick of -2,086 was the most
negative since a -2,098 reading on June 11 of last year.
In the wake of this, the indexes are off their early lows
established in the first 1 to 10 minutes or so of the session,
and trying to make a comeback.
However, even with the recovery attempts, the S&P 500 growth
/S&P 500 value ratio is on track for an 11th
straight down day, which is longest such streak since a 12-day
run of losses in September 2017.
Nearly all major S&P sectors are red, with utilities
and tech among those taking the biggest
hits. Materials are the sole gainer. This as the U.S.
10-Year Treasury yield pops up to the 1.63% area.
Here is where markets stand early on Tuesday:
(Terence Gabriel)
*****
NASDAQ 100 FUTURES: PEERING OVER A CLIFF? (0900 EDT/1300
GMT)
Since their April highs, Nasdaq
and tech-laden indexes, have come
under increasing downside pressure.
In fact, CME e-mini Nasdaq 100 futures are now down
around 7% from their April 16 record close and April 29 record
intraday high, in just 17 and 8 trading days.
This in the wake of a noticeable momentum lag:
Indeed, with the mid-April futures' high, the weekly RSI
failed to muster enough strength to reclaim the 70.00 overbought
threshold. With this, it formed its third lower peak vs its
early January high, which of course was well below its August
2020 peak. Thus, a protracted momentum divergence was in place.
With this week's slide, the futures are once again
threatening a close below the 20-week moving average, which now
resides around 13,300. The futures have recorded 56 straight
weekly closes above this moving average, which is the longest
such run since a 61-week streak from late 2016 to early 2018.
Additionally, the futures are violating the weekly support
line from the March 2020 trough, which also now resides around
13,300.
Holding below these barriers, which are now resistance,
while the weekly RSI threatens to fall into oversold territory,
can keep the futures on the back foot, with the March trough, at
12,194.75, potentially the next big test.
Meanwhile, based on Tuesday's across the board premarket
futures weakness, and now rising volatility measures
, the recent performance rift among various indexes may be
about to be resolved with them all headed into a valley,
together.
(Terence Gabriel)
*****
FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300 GMT
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
