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May 3 - 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
EUROPEAN SHARES HIGHER AS ENERGY SECTOR RALLIES (1139 EDT/1539 GMT)
European shares ended mostly higher on Tuesday in what was a calmer session than that seen on Monday when a "flash crash" saw the Stockholm OMX 30 briefly fall 8% before bouncing.
The pan-European STOXX 600 ended Tuesday's trading session up 0.4%. Germany's DAX and France's CAC 40 rose 0.7% and 0.8% respectively.
Britain's FTSE 100 was the laggard, but still eked out a 0.2% gain, as it played catch up with Monday's weak European performance after being closed for a market holiday.
BP shares were the notable bright spot in London, rising over 5.7%, after the energy giant reported its strongest operational performance in more than a decade, even though a $24 billion writedown from exiting Russia led to a record quarterly loss.
BP's performance helped propel Europe's energy sector to its highest level in over a week.
Logistics REITs were weak with Segro and Tritax Big Box at the bottom of the STOXX 600 amid signs of a slowing trend for online shopping, evidenced by Amazon's cautious earnings report.
(Samuel Indyk)
READY FOR A CHILL PILL: JOLTS, FACTORY ORDERS (1112 EDT/1512 GMT)
Two reports from the last month of the first quarter were released on Tuesday, both of which put the severe demand/supply imbalance into stark relief, further justifying aggressive tightening by the Fed, which convenes over the next two days in order to do just that.
The number of unfilled jobs in the U.S. rose in March to a record-shattering 11.549 million adding 205,000 openings to February's previous all-time high.
Available gigs now account for 7.1% of the workforce, nearly double the most recent 3.6% unemployment reading.
The Labor Department's job openings and labor turnover survey (JOLTS), an overview of labor market churn, also showed that new hires and layoffs stalled while the quit rate gained momentum.
"The rebound in the quit total and low layoff reading is good news for prospective job growth over the next six months," writes Stan Shipley, managing director at Evercore ISI. "Based upon March's payroll report, gross hiring and quit totals should stay high in April and beyond."
The quit rate - often seen as a barometer of consumer expectations, as workers are unlikely to walk away from a gig in times of economic uncertainty - could very well be a sign that companies are becoming increasingly competitive, pouring on the honey in order to attract more worker bees.
A persistent worker drought in which there are approximately two open jobs for every unemployed worker, while companies are forced to jack up wages in order to retain and attract employees, is a state of affairs being watched closely by Powell & Co as they prepare to aggressively hike interest rates and tighten its policy to combat stubbornly high inflation.
Market participants will have exactly two days to digest the impending rate hike before the Labor Department releases its highly anticipated April jobs report, which analysts expect will show 400,000 job adds and an unemployment rate falling even further, to 3.5%.
Separately, new orders for U.S.-made merchandise surged by 2.2% in March, double the expected increase and marking a sharp acceleration from the prior month's paltry - though upwardly revised - 0.1% gain.
The number jibes well with the Institute for Supply Management's most recent PMI reading released on Monday, which showed the manufacturing sector - accounting for about 11% of U.S. GDP - has notched 22 consecutive months of expansion.
"The factory outlook remains solid despite ongoing supply chain disruptions, as retail and wholesale firms struggle to rebuild inventories," says Mike Englund, chief economist at Action Economics.
The Commerce Department's report also revised its initial take on new orders for durable goods, bumping them up 0.2 percentage points to a monthly gain of 1.4%.
Line-by-line, while commercial and defense aircraft plunged by 25.6% and 10.0%, respectively, surging orders for autos, electrical equipment/appliances and computers/electronics more than compensated.
Perhaps more significantly, core capital goods - which strips away aircraft and defense items and is widely regarded as a proxy for U.S. business spending plans - was jacked up to 1.3% from 1.0%.
Wall Street is once again switching direction like a weather vane in a tornado, indecisively seesawing between red and green.
At last glance, the indexes are positive with the S&P 500 up around 0.6%. The S&P 500 Banks index is up nearly 2%.
(Stephen Culp)
AN AVERAGE CORRECTION, SO DON'T SELL IN MAY (1034 EDT/1434 GMT)
April showers bring May flowers and Wall Street's "Sell in May and go away," adage may well be a potential explanation for market volatility this month because, the end of April tends to mean the end of the best six months for stocks.
But Ryan Detrick, chief market strategist at LPL, cautions against following the adage's advice this year.
It's not that Detrick disagrees with historical statistics showing that May-Oct tends to be second best. He acknowledges an average S&P 500 increase of 1.8% for May-Oct versus a 7.1% increase for Nov-April going back to 1950.
But "Sell in June" might have worked better in the last 9 years as the S&P showed May gains in eight of those. And the S&P showed positive returns in nine out of the last 10 years in May-Oct, with 2015 the aberration, with a 0.3% drop, and the biggest gain in 2020, at 12.3%, leaving the average at 5.7%.
This year, a show of "extreme caution and fear" from various sentiment markers could actually be bullish, if you're a contrarian like Detrick, that is.
He cites the so-called fear index, the CBOE VIX Index recent spike above 30 while stocks tumbled, as clear signs of fear.
Meanwhile, money managers are sitting on a good deal of cash with no recession on the horizon for 2022, as per Detrick.
And despite a lackluster Q1 gross domestic product (GDP), he still expects 3% economic growth this year, with strong corporate earnings, accelerating business investment and healthy consumers. Of course, you could point to the S&P's depressed start to the year, but Detrick says the 13.9% drop, at the time of his writing, is actually near the 14% average for all years since 1980. While the average stock market drop in midterm election years is 17%, he also reminds us that stocks tend to rebound in the 12 months after the midterm-year lows.
Of the last 21 times the S&P 500 has fallen in the double-digit percentage range in any year since 1980, "stocks rallied back to end the year positive 12 times."
Here is LPL's graphic of sell-offs going back to the 1980s:
In those 12, the average gain at the end of the year was 17%. So, Detrick, who prefers a modest overweight allocation for equities and a slight underweight for fixed income, is telling May naysayers to loosen up.
His year-end 2022 target is 4,800-4,900 for the S&P 500. From Monday's close of 4155, that would imply a not-too-shabby increase of 15.5% to 17.9%. "Although our guard is up for some potential seasonal weakness and choppy action, be aware it could be short-lived and consider using it as a buying opportunity," he says.
(Sinéad Carew)
ON EDGE, AHEAD OF THE FED (0952 EDT/1352 GMT)
Major U.S. stock indexes are searching for clear direction in early trade on Tuesday after a slew of underwhelming earnings reports, while investors brace for a big interest rate hike by the Federal Reserve this week to tame surging prices.
The U.S. central bank kicks off its two-day policy meeting on Tuesday, with traders seeing a 93.9% chance of a 50 basis points hike. Focus will be squarely on Fed Chair Powell's press conference on Wednesday for comments on the future path of interest rates and balance sheet reduction.
Here is where markets stand early in Tuesday's session:
(Terence Gabriel)
NASDAQ COMPOSITE: WEAK, BUT WASHED OUT? (0900 EDT/1300 GMT)
Amid Monday's intraday weakness, the Nasdaq Composite hit 12,202.409, which was its lowest level since November 30, 2020, and a 25% collapse from its November 22 record intraday high. That said, thanks to a last hour surge, the Composite reversed to the upside and closed in positive territory on the day.
Meanwhile, a Nasdaq internal measure, the New High/New Low (NH/NL) index, remains on the back foot:
This measure has now fallen seven-straight days, ending Monday at 10.9%. It remains below its descending 10-day moving average (DMA), which ended Monday at 17.9%.
On the plus side, however, the current reading of 10.9% may be washed out in its own right. And despite lower IXIC lows, the measure is still stronger than its late-January 6% trough, or its 10.4% mid-March low.
If the NH/NL index can immediately turn higher, and reclaim its 10-DMA, potential can build for what could be a surprisingly strong Nasdaq rally.
Conversely, a continued decline may coincide with deeper IXIC losses. However, even in the event of further weakness, it might only take several days to a week from current levels for the measure to reach its 6% January trough or its 1.2% March 2020 low. In that event, the Composite might once again be especially ripe for a significant upside turn.
Of note, the NH/NL index's 1.2% March 23, 2020 low coincided with the IXIC's pandemic crash closing low.
The measure's December 27, 2018 1.6% low came just two trading days after the market's December 24, 2018 bottom.
Using Refinitiv data back to 1995, the measure's all-time lows were during the Great Financial Crisis in late-2008/early 2009 in the 0.5%-0.9% area.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
