* Nasdaq ends up, S&P 500 just below flat, Dow modestly down
* Staples weakest S&P sector; energy leads gainers
* Dollar dips; gold, crude, bitcoin gain
* U.S. 10-Year Treasury yield ~1.23%
July 28 - 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
S&P 500 ENDS A TAD LOWER AFTER FED SOOTHES INVESTORS (1605
EDT/2005 GMT)
The S&P 500 ended marginally lower on Wednesday, but still
near record levels, after the Fed said the U.S. economic
recovery remains on track despite a rise in coronavirus
infections.
After a new policy statement that remained upbeat and
flagged ongoing talks around the eventual withdrawal of monetary
policy support, the S&P 500 shook off losses and moved
higher, only to dip again in the session's final minutes.
Asked about risks related to the increasingly prevalent
Delta variant of the coronavirus, Powell told reporters that the
economy is becoming increasingly adaptive to the effects of the
pandemic.
The Nasdaq rose, lifted by Alphabet after
the Google-owner delivered a knock-out quarterly report late on
Tuesday. Alphabet added over 3% and hit a record high.
Microsoft Corp edged lower after a boom in cloud
services helped it beat Wall Street expectations for revenue and
earnings.
Among the 11 S&P 500 sector indexes, energy jumped
nearly 1%, while consumer staples fell nearly 1%.
Here is your closing snapshot:
(Noel Randewich)
*****
STOCKS MOVE MODESTLY AFTER FOMC RESULTS (1416 EDT/1816 GMT)
Action in the major U.S. stock indexes has been relatively
subdued in the wake of the release of the latest FOMC results.
The Fed left rates unchanged, but did say that the economy
continues to "strengthen." The FOMC also cited progress on bond
taper goals.
Following the Fed's announcement, the S&P 500 has
added around 0.2%, putting it roughly flat for the day.
Regarding the FOMC Statement, Paul Nolte, Portfolio Manager
at Kingsview Asset Management said, "There wasn’t much there.
One of the things we might look at is the statement that the
economy is making progress and being more than one meeting
before the Fed decides when they’re going to taper."
Nolte added "Some were thinking that Jackson Hole may be the
place where they were going to make a big announcement, but I
think that may be off the table."
Here is where market's stand ahead of Powell's press
conference:
(Terence Gabriel, Stephen Culp)
*****
CHINA ADR INVESTORS CATCH A FALLING KNIFE (1307 EDT/1707
GMT)
Investors in U.S.-listed Chinese companies are attempting to
catch a falling knife on Wednesday, with tech heavyweights
including Tencent Holdings , Alibaba Group
Holding and Pinduoduo rebounding
sharply after a three-day selloff caused by regulatory fears.
The bounce in Chinese Internet companies on Wall Street
follows a volatile session in China that saw the Shanghai
Composite Index drop as much as 2% before ending down
0.6% as a Chinese state-owned securities newspaper urged calm.
In Hong Kong, the Hang Seng Tech index rebounded 3.1%.
In U.S. trading, the KraneShares CSI China Internet ETF
is surging 10%. The ETF is now down 14% from the start
of last Friday, when Beijing unveiled a crackdown on private
tutoring companies, panicking investors already worried about
growing regulation by China's government.
Since the start of Friday, almost 100 of the most traded
Chinese companies listed on U.S. exchanges have lost almost $300
billion in combined market capitalization, according to
Refinitiv data.
Tencent and Alibaba are both jumping about 5% on Wednesday,
while Pinduoduo is surging 16% and Didi Global
is rallying 11%. Private education stocks at the heart of the
recent bloodshed are also bouncing back, with Gaotu Techedu
jumping 24% and New Oriental Education & Technology
Group surging 9%.
(Noel Randewich)
*****
NEW RECORD FOR THE STOXX: ALMOST BUT NOT QUITE (1246
EDT/1646 GMT)
European equities didn't manage to reach a new record peak
by a whisker today but easing Chinese angst nevertheless helped
the STOXX 600 run past the finish line at its session highs.
With the focus squarely on the Fed, investors may have opted
to wait until the meeting is over before deciding whether the
pan-European benchmark merits a new all-time high.
At the close, the STOXX just needed an extra 0.06 points to
cross above its previous peak, as you see in the snapshot:
(Danilo Masoni)
*****
WILL FED MEETING FIREWORKS BURST ON THE SCENE? (1200
EDT/1600 GMT)
LPL Financial Research is out with some thoughts on what to
expect from Wednesday's Federal Reserve Meeting. Results are due
at 1400 EDT/1800 GMT.
LPL says that the FOMC is expected to discuss if, and when,
the Fed should start to remove the emergency level policy
response that it has provided since the beginning of last year’s
COVID-19 shutdowns.
Last month’s meeting sparked some market volatility as some
of the comments, along with the data releases, were interpreted
as a shift in tone to be slightly less accommodative. LPL
cautions that although we won’t be getting the same type of data
releases at the conclusion of this meeting, "that doesn’t mean
the market can’t (over)react to what is and isn’t said."
“We’re not expecting fireworks at this Fed meeting,” notes
LPL Financial Fixed Income Strategist Lawrence Gillum. “But we
are expecting the committee to go further down the road in
discussing the when and how to start removing the emergency
level monetary accommodation it has been providing markets.”
As for their post-meeting statement, LPL thinks the
committee may reinsert language around COVID-19 risks given the
uptick in Delta variant cases.
Additionally, LPL doesn't think the Fed is ready to announce
the start of the tapering process. However, LPL does expect the
committee to announce that those discussions are underway with a
formal plan to be released in the next few months.
According to LPL, the market is more concerned about rising
interest rates than tapering. Therefore, any hint on the timing
of a rate hike will likely increase market volatility.
LPL adds that largely due to the expected slowdown in
economic growth due to the COVID-19 delta variant, the market
now thinks the Fed will wait until the first part of 2023 to
hike rates.
(Terence Gabriel)
*****
U.S. STOCKS CHOP AHEAD OF THE FED (1107 EDT/1507 GMT)
Major U.S. indexes are mixed ahead of the results of the
latest FOMC Meeting, expected at 1400 EDT/1800 GMT.
Nasdaq, underpinned by a rally in Alphabet
, is out front, while the S&P 500 edges higher,
and the Dow Industrials slip.
Given GOOGL gains, and a snap back in Chinese shares
, including Alibaba and Baidu, the NYFANG+ TM index
is rallying more than 2%. In fact, in late-morning
trade, 9 of 10 NYFANG members are higher, with only Apple
just slightly red.
Of note, Facebook is due to report after the close,
while Amazon.com is due to report Thursday.
Chip stocks are also among the winners on Wednesday.
That said, the Dow Transportation Average are off
around 1%, and threatening its recent lows.
Here is where markets stand in late-morning trade:
(Terence Gabriel)
*****
CLEARING THE HUMP ON HUMP DAY: DATA SUGGESTS A NORMALIZING
ECONOMY (1020 EDT/1420 GMT)
Data released on Wednesday showed the U.S. recovery
outpacing its global peers, wholesalers and retailers refilling
their stock rooms, and the housing market easing into a lower
orbit.
On that last point, surging home prices due to low
inventories and high homebuilder input costs are increasingly
throwing water on the white-hot demand resulting from a
pandemic-driven suburban diaspora.
True, but demand for home loans increased by 5.7% last week,
fueled by a 10-basis-point drop in the average 30-year fixed
contract rate, according to the Mortgage Bankers
Association.
And while that prompted a 9.3% increase in refi demand
, the bad news is that applications for loans to
purchase homes slid 1.6%.
"The purchase index decreased for the second week in a row
to its lowest level since May 2020, and has now declined on an
annual basis for the past three months," says Joel Kan, MBA's
associate vice president of Economic and Industry Forecasting.
"Potential buyers continue to be put off by extremely high home
prices and increased competition."
Nancy Vanden Houten, lead economist at Oxford Economics,
concurs:
"Limited inventories and record increases in home prices
continue to constrain the pace of home sales," Houten writes.
"The sharp rise in prices has taken a toll on affordability; the
National Association of Realtors housing affordability index was
down 16% in May, y/y, falling to its lowest level in two years."
In a separate report, the Commerce Department released its
advance take on goods trade balance and wholesale
inventories for the month of June.
The gap in the value of goods imported to the United States
and U.S.-made goods exported overseas widened to $91.21 billion
last month, as a meager 0.3% increase in exports was
overshadowed by a 1.5% surge in imports.
"The U.S. recovery has been faster than in most other
developed economies, thanks to the scale of the fiscal and
monetary easing," noted Ian Shepherdson, chief economist at
Pantheon Macroeconomics. "As a result, imports now stand about
12% above their pre-Covid level but exports are little changed.
"The gap should narrow as global growth recovers and the
flow of U.S. stimulus spending slows."
The contents of wholesaler warehouses increased by 0.8% in
June, building on May's 1.3% growth, marking the tenth
consecutive month of increases.
"More important, nonauto retail inventories (the key input
from the retail data for GDP) were +0.6% m/m after +0.9% m/m in
May," notes Rubeela Farooqi, chief U.S. economist at High
Frequency Economics.
This bodes well for second-quarter GDP, as overall private
inventories contributed a net drag on the economy during the
first three months of the year.
On Thursday, the Commerce Department is due to release its
first stab at second-quarter GDP, which analysts expect to have
increased at a 8.5% quarterly annualized rate.
Wall Street is struggling for direction in morning trading.
The tech-laden Nasdaq is faring best, with Alphabet Inc
, in the wake of its better-than-expected earnings
report, doing the heavy lifting.
That said, the Dow Transports are off more than 1%.
(Stephen Culp)
*****
NASDAQ'S INDIGESTION INTENSIFIES (0900 EDT/1300 GMT)
The Nasdaq Composite ended a 5-day win streak on
Tuesday. With this, it fell from an all-time high, that had
marked its 26th record-high close so far this year.
However, in the wake of a number of big-tech earnings
reports after the close, CME e-mini Nasdaq 100
futures are suggesting the potential for some opening
gains Wednesday.
That said, one measure of internal strength continues to
deteriorate suggesting the Nasdaq's condition is not as healthy
as it appears:
Since topping at 90.2% on June 14, the Nasdaq New High/New
Low (NH/NL) index ended Tuesday at 41.2%, putting it at its
lowest level since April 17, 2020. This with the IXIC ending
only a little more than 1% below Monday's record-high close.
Also highlighting the severity of this measure's recent
divergence with the Nasdaq, on Monday, its 45.5% reading was its
weakest close, with the Composite at an all-time high, since
early-November, 1999!
In any event, just since early 2020, there have been four
Nasdaq sell-offs from record-high territory, ranging from
8.5%-32.6% (average 16.6%, median 12.7%), all of which developed
in the wake of NH/NL index divergence.
Therefore, it may now be critical for the NH/NL index to
quickly reverse to the upside, or the Nasdaq could soon be
vulnerable to something more than the effects of what appears to
be intense indigestion.
(Terence Gabriel)
*****
FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300
GMT - CLICK HERE:
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)