* Major U.S. indexes gain; Nasdaq, S&P up >1%
* Tech leads major S&P sector gains; energy sole decliner
* Dollar, crude down; gold up, Bitcoin up 7%
* U.S. 10-year Treasury yield ~1.63%
May 20 - 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
WELLS FARGO INVESTMENT INSTITUTE UPS YEAR-END TARGETS (1330
EDT/1730 GMT)
Wells Fargo Investment Institute has nudged upwards its
targets for how U.S. GDP growth, inflation, stock indexes, and
longer-dated Treasury yields will end 2021.
In an alert on Thursday, the institute said it moved its GDP
forecast to 7% from 5.7% and inflation target to 3.8% from 2.5%.
It pointed to a clearly developing economic rebound that is
likely to spur stronger growth and a surge in spending that
sparked price hikes.
"Inflation is likely to decelerate into 2022, but softer
spending in the back half of 2021 should begin to moderate
inflation pressures," the alert said.
In financial markets, the institute said "we now expect more
consistent outperformance from U.S. cyclical equity and real
estate sectors." It added that strong economic growth, record
earnings, federal stimulus, and "a supportive Federal Reserve"
led to upward revisions to targets.
WFII raised its target for the S&P 500, projecting it
will end the year in the 4,400-4,600 range versus a previous
target of 4,200-4,400.
On the longer end of Treasury yield curve, the target for
the 10-year note was raised to 2%-2.5% from
1.75%-2.25% and the 30-year bond to 2.75%-3.25% from
2.5%-3%.
"While we have increased our long-term rate targets we
continue to favor the intermediate part of the yield curve to
take advantage of higher yields without overly exposing
portfolios to longer-duration, more rate-sensitive securities,
which may struggle as interest rates increase," the alert said.
(Karen Pierog)
*****
VOLATILITY TASTES BETTER WITH COFFEE ON THE TERRACE (1210
EDT/1610 GMT)
After declining for three straight days the S&P was
attempting a comeback on Thursday. But instead of being scared
of the volatility, investors should use it as an opportunity,
according Mark Haefele, chief investment officer for global
wealth management at UBS.
Everything from inflation concerns, China's crackdown on
cryptocurrencies and coronavirus worries, including renewed
restrictions in several Asian economies, have conspired to put
pressure on stocks according to Haefele.
But none of the recent developments undermine his conviction
that the global economy is entering a reflation period and he
says "the trend toward a global reopening remains on track,
despite delays and localized setbacks."
To support his optimism Haefele cited the reopening of café
and restaurant terraces in France following similar moves in
Belgium and Hungary, and the reopening of indoor dining in UK
pubs while Europe gave the OK for vaccinated people to travel.
And he said that "each of the factors pushing the markets
lower has been (or will prove) temporary," that crypto market
spill overs will be limited and inflation pressures will be
transient.
So he's suggesting that investors phase into the market and
position for reflation in sectors like energy and financials as
these sectors, even while outperforming the nine other major
industry indexes so far this year, still have further to run.
While Haefele sees limited near-term upside for mega-caps,
he favors small and midsize companies with exposure to areas
such as 5G, fintech, greentech, and healthtech.
(Sinéad Carew)
*****
JOBLESS CLAIMS, PHILLY FED: GRINNING AND BEARING IT (1105
EDT/1505 GMT)
Data released on Thursday showed the U.S. economy, laden by
a dearth of workers and materials in the face of booming demand,
is still trudging along an upward course.
The number of U.S. workers filing new applications for
unemployment benefits continued its long march
downward last week, hitting 444,000 according to the Labor
Department.
The number came in just below consensus and was the lowest
reading since COVID-related shutdowns abruptly shuttered
businesses in mid-March of last year.
"While the labor market recovery may be choppy at times as
supply and demand imbalances get resolved, we still expect
around 8mn new jobs to be added this year," writes Nancy Vanden
Houten, lead U.S. economist at Oxford Economics.
Further decreases are in the cards in the coming weeks,
after at least 21 Republican governors have vowed to eliminate
their states' emergency unemployment subsidy programs.
"While the loss of benefits may pose a hardship for those
directly affected, the aggregate hit to disposable income will
be relatively small," Houten adds.
Still, in a normal world, last week's claims were elevated.
For context, the number of claims exceeded the population of
Oakland, California.
Ongoing claims, reported on a one-week lag,
unexpectedly crept higher to 3.751 million.
In a separate report, east coast factory activity
decelerated much more sharply this month than analysts expected.
The Philadelphia Fed's Business index (aka Philly Fed)
plunged nearly 19 points to a reading of 31.5, well
below the even 43 anticipated by economists.
Still, it represented an expansion on top of April's fastest
growth in nearly 50 years.
A reading above zero indications increased activity over the
previous month.
"Overall, manufacturing is still seeing support from strong
demand and is moving closer to pre-pandemic levels," notes
Rubeela Farooqi, chief U.S. economist at High Frequency
Economics. "But ongoing supply chain bottlenecks remain a
constraint."
Wall Street's mood brightened by late morning trading.
All three major U.S. indexes were green, with tech shares
, boosted by chips, leading the charge.
(Stephen Culp)
*****
STOPPING THE BLEEDING (1016 EDT/1416 GMT)
Major U.S. indexes are higher in the early stages of
Thursday trading, with each poised to snap a three-day streak of
declines as mixed economic data helped ease concerns about the
timing of a move by the Federal Reserve to pull back on its
accommodative stance.
Data showing weekly initial jobless claims suggested job
growth picked up last week, while manufacturing in the
mid-Atlantic region grew at a slower pace helped cool jitters
about a central bank move in the wake of Wednesday's knee-jerk
reaction to the minutes from the central bank's most recent
meeting which hinted at tapering down the road.
Tech and communication services are
leading the way higher and helping lift the Nasdaq by
more than 1%, and giving the index a gain for the week for the
time being as it looks to avoid its longest weekly losing streak
in nine years.
Below is your market snapshot:
(Chuck Mikolajczak)
*****
THE TAKE-PRIVATE BOOM (0905 EDT/1305 GMT)
Private equity firms have completed more take-private deals
in the first five months of the year than in any year since at
least the global financial crisis, data from Dealogic shows.
In the five months to May, 12 companies in the UK were
delisted and 96 globally. This represents the highest number of
take-private acquisitions over the same period since at least
2008.
The number and volume of deals so far this year put 2021
already on track to be one of the strongest year for take
private acquisitions in Britain.
One of the latest deals includes Clayton, Dubilier & Rice
(CD&R) deal to buy London-listed UDG Healthcare for 2.6
billion pounds ($3.7 billion).
(Joice Alves)
*****
NASDAQ COMPOSITE: LACKING THAT INTERNAL SMILE (0850 EDT/1250
GMT)
The Nasdaq Composite is down around 6% from its
April highs and with this, the tech-laden index is on pace to
accomplish a relatively rare feat.
Indeed, the Composite on track to fall for a 5th-straight
week. Since the Great Financial Crisis low in March 2009, the
IXIC has only seen two other losing streaks of more than 4
weeks. A 5-week stretch in May-June 2011, and a 6-week run of
losses in October-November 2012. Thus, it's been almost 9 full
years since the Composite last fell for at least 5-straight
weeks.
With this recent setback, measures of internal strength have
severely weakened. For example, the Nasdaq New High/New Low
(NH/NL) index, which matched a 10-year high of 96.4% in
January, has now fallen to 50.2%:
However, it is now reaching what can be considered support.
Since the March, 2020 market lows, this measure has bottomed in
49.7% to 43.8% area.
Therefore, it may now be critical for the broader Nasdaq to
show its mettle. That said, the NH/NL index will need to reclaim
its descending 10-day moving average (now 60.6%) to add credence
to the view that it has formed some sort of low.
Falling below 43.8%, and maintaining its downtrend, can
suggest potential for a greater collapse. Of note, major lows in
late 2018 and early 2020 were in the 1.2%-1.6% area.
(Terence Gabriel)
*****
FOR THURSDAY'S LIVE MARKETS' POSTS PRIOR TO 0850 EDT/1250
GMT - CLICK HERE:
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
