* Nasdaq gains, S&P 500 up slightly, Dow ~flat
* Energy leads S&P sector gainers; staples weakest group
* Euro STOXX 600 index ends up ~0.3%
* Dollar, gold, crude now all around ~flat
* U.S. 10-Year Treasury yield ~1.57%
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PEAK U.S. GROWTH, CAPITAL GAINS TAX HIKES: A LID ON S&P 500
GAINS (1225 EDT/1625 GMT)
In Goldman Sachs' latest Weekly Kickstart note, Chief U.S.
Equity Strategist David Kostin, comments on what effect peak
growth and the proposed capital gains tax hike might have on the
According to Kostin, investors buying the S&P 500 as growth
peaked have "typically realized negative short-term returns and
weak 12-month returns." He says this is consistent with the 3%
upside built into Goldman's year-end SPX target of 4,300.
That said, he argues that although cyclical outperformance
usually dissipates as growth fades, an accelerating global
economic rebound should underpin internally exposed cyclical
As for capital gains taxes, Kostin adds that S&P 500 returns
have been weak ahead of past capital gains tax hikes. However,
selling proved to be short-lived and reversed in the wake of the
Using Federal Reserve data, Kostin's estimates the
wealthiest households now hold $1 to $1.5 trillion in unrealized
capital gains. He says this equates to 3% of the total U.S.
equity market cap and around 30% of average monthly S&P 500
INFLATION CHATTER ON FRONT BURNER THIS EARNINGS SEASON (1113
Savita Subramanian, Equity & Quant Strategist at BofAS, is
out with some comments on the building chatter surrounding
inflation this earnings season.
Subramanian says that inflation "is arguably the biggest
topic during this earnings season." She notes that a broad array
of companies from the consumer, industrial, and materials
sectors are citing inflation pressures.
In fact, she says that the number of mentions of "inflation"
during earnings calls has risen sharply, more than tripling
year-over-year, which is the biggest jump in BofAS' history
going back to 2004.
Subramanian says that "the number of mentions has
historically led CPI by a quarter with 52% correlation and
points to a robust rebound in inflation ahead."
She adds that such factors as raw materials, transportation,
and labor have been cited as major drivers of inflation and many
of the companies plan to, or already have, raised prices to pass
on higher costs.
In previous notes, BofAS has flagged small caps and value as
beneficiaries during phases of stronger inflation. Additionally,
they see energy and materials as inflation-sensitive sectors.
U.S. STOCKS RISE AS INVESTORS EYE TECH EARNINGS (1040
U.S. stocks are higher in morning trading on Monday ahead of
a big batch of tech-related earnings.
The energy sector is leading gains, followed by
financials, which are up more than 1% each.
Tesla Inc shares also rose as analysts expect the
company to report a rise in first-quarter revenue when it
reports after markets close following record deliveries during
DROPPING AIRCRAFT ORDERS KEEP DURABLE GOODS EARTHBOUND (1030
New orders for U.S.-made durable goods - which
includes everything from waffle irons to fighter jets - grew by
a tepid 0.5% in March, according to the Commerce Department.
The number fell well short of the 2.3% consensus and
represents only a slight rebound from February's 1.1% decline,
which was largely attributable to bitter winter storms that
paralyzed much of the country.
Plunging aircraft/parts orders capped broader gains, with
defense and non-defense dropping 20.2% and 46.9%, respectively.
But a 5.5% gain in autos/parts and a 3.8% advance in defense
capital goods excluding aircraft kept the headline number
"As the economy reopens more broadly, industrial activity
will continue to be propelled by strong tailwinds including
large fiscal stimulus, buoyant demand, and strong corporate
profits," writes Lydia Boussour, lead U.S. economist at Oxford
Economics. "These should more than outweigh ongoing headwinds
from stretched supply chains and the global semiconductor
"We expect non-residential private fixed investment to grow
7.6% this year, the fastest since 2012," Boussour adds.
Core capital goods, which excludes aircraft and
defense, and is seen as a barometer of business spending
intentions, also fell short of expectations, rising 0.9% versus
the 1.5% projected by economists.
Even so, new orders for core capital goods are up 10.4%,
"We hoped for bigger recoveries in orders ex-transportation
and core capital goods orders, following the huge hit from the
winter storm in February," says Ian Shepherdson, chief economist
at Pantheon Macroeconomics. "But it's far too soon to argue that
these data signal a moderation in the pace of the industrial
Investors began this heavy earnings week in a modestly
All three major U.S. stock indexes were green in early
trading, with economically sensitive small caps and chips
NASDAQ COMPOSITE: CAN IT MAINTAIN ORBIT? (0900 EDT/1300 GMT)
With Nasdaq's titans expected to release quarterly numbers
this week, the Nasdaq Composite may be at an important
juncture. This after the Composite ended Friday within 1% of its
Feb. 12 record-high weekly close of 14,095.
Meanwhile, one measure of the Nasdaq's internal strength hit
a fresh record high on Friday. Despite this, of some concern,
this measure's momentum is waning:
Indeed, Nasdaq's cumulative net new highs (NNH)
(running sum of new highs - new lows), on a weekly basis,
bottomed in early April 2020, and has been trending up, above
its 12-week moving average (WMA), for 47 straight weeks. The
measure ended Friday at an all-time high of about 175k.
Of note, just looking back over the past 6 years or so,
periods when cumulative weekly NNHs were above its 12-WMA have
coincided with protracted Nasdaq strength. Conversely, periods
when cumulative NNHs were below the 12-WMA have occurred with
The spread between the measure and its 12-WMA is still
positive. That said, its thrust is waning. The spread peaked on
Feb. 12, or with the Composite's weekly closing high. It has
since contracted nine out of the past 10 weeks.
A weekly down-tick in cumulative NNHs, followed by a break
of its 12-WMA, could suggest that an important bearish trend
change is occurring within the Nasdaq. In that event, gravity
may then prevail.
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)