* Major U.S. stock indexes climb; Nasdaq up most
* All 11 S&P sectors higher, tech leads
* Dollar, crude, bitcoin gain; gold slips
* U.S. 10-year Treasury yield ~1.51%
Nov 29 - 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
WALL STREET ENDS SHARPLY HIGHER AS OMICRON PANIC RECEDES
(1610 ET/2110 GMT)
Wall Street ended sharply higher on Monday, bouncing back
from Friday's slump as investors worried a bit less about the
new Omicron coronavirus variant.
Investors were reassured by comments from President Joe
Biden that Omicron-related lockdowns were off the table,
although he warned the variant was a cause for concern.
Big Tech and other major growth stocks led gains, with the
S&P 500 tech index jumping 2.6%, recovering all of
Friday's decline in its biggest daily percentage gain since
March 9. Microsoft, Apple, Nvidia and
Tesla lifted the S&P 500 more than any other
stocks.
The Philadelphia semiconductor index soared 4.1% in
its strongest session since March. That index is now down less
than 0.1% from its Nov. 19 record closing level.
The S&P 500 growth index jumped about 2%, far
outpacing the value index's 0.4% gain.
With Monday's rally, the S&P 500 is up about 24% year to
date, and it is roughly 1% below its record closing high on Nov.
18.
Here is your closing snapshot:
(Noel Randewich)
*****
CHIP STOCKS BOUNCE BACK AS INVESTORS AWAIT OMICRON DETAILS
(1315 ET/1815 GMT)
U.S. semiconductor stocks are surging on Monday following
last Friday's coronavirus-driven selloff, with the main chip
index less than 1% away from its previous record closing high.
Chip stocks spearheaded a broad tech rally as investors
second-guessed last Friday's over-2% drop in the Nasdaq
and awaited more information an the Omicron coronavirus variant.
The Philadelphia Semiconductor Index was last up
3.4%, more than making up for its nearly 3% drop on Friday. The
SOX is down about 0.7% from its record high close on Nov. 19.
Nvidia and Qualcomm both jumped over 4%
and lifted the SOX index more than any other companies.
Memory chip maker Micron Technology jumped 2.3% after
DigiTimes reported https://www.digitimes.com/news/a20211129PD214.html,
in a story citing industry sources, that DDR3 memory chip
prices would likely recover in early 2022.
With Monday's bounce back, the chip index is now up 39% in
2021.
(Noel Randewich)
*****
VOLATILITY SPIKES LEAD TO ROBUST REVERSALS - CREDIT SUISSE
(1315 ET/1815 GMT)
News of the Omicron COVID-19 variant sent markets into a
tailspin on Friday, to the tune of a 2.3% drop in the S&P 500
, a 3.7% fall in the small cap Russell 2000, oil
prices down about $10 and the yield on the 10-year U.S. Treasury
note declining as low as 1.47%.
According to Jonathan Golub, chief U.S. equity strategist at
Credit Suisse, investors had been treating pandemic concerns
with less weight than inflation, stock valuations, central bank
policy and China growth prior to Friday's news.
And while investors may pause on making investment decisions
until they have greater clarity on Omicron, Golub notes about
spikes in volatility, such as on Friday when the CBOE Volatility
index jumped about 10 points to 28.6, that "equity
returns tend to be twice as rich during periods of heightened
volatility, with small caps leading the charge."
When the VIX is greater than 15, the subsequent 2 months
return is 2.9% for the S&P 500 and 3.5% for the Russell 2000,
according to Golub. That jumps to 5.1% and 6.7%, respectively,
when the VIX is greater than 20, and rises to 6.4% for the S&P
500 and 8.4% for the Russell when the volatility index is
greater than 25.
(Chuck Mikolajczak)
*****
OIL CAPACITY SHOCKS COULD MEAN $150 A BARREL BY 2023 –
JPMORGAN
Oil producers are likely to have capacity shocks in the
coming two years that could see oil prices jump to $125 a barrel
in 2022 and $150 a barrel in 2023, according to analysts at
JPMorgan.
Brent crude prices have eased since hitting a three-year
high of $86.70 a barrel on Oct. 25 though prices remain
relatively elevated at $76.14 a barrel. JPMorgan sees the
problem getting worse due to underinvestment in the sector over
the past 18 months.
The bank expects that OPEC+’s spare capacity will be around
2 million barrels a day in 2022, which is 43% below consensus
estimates of 4.8 million barrels a day, and sees the group’s
total capacity shortfall extending to 3 million barrels a day by
the first half of 2024, compared to OPEC+’s target of 49.1
million barrels a day in that time frame.
OPEC+ “has returned to a (position) of positive leverage,
which it will defend by keeping inventories low, the market in
balance and taking action to support optimal reservoir
management through paced volume growth,” the analysts said.
Longer-term oil prices of $80 a barrel is likely needed to
spur the investment needed to increase capacity as demand grows,
and oil is likely to trade around this price from 2024, JPMorgan
said.
In the interim, however, prices are expected to rise to $90
a barrel in 2022 and $104 a barrel in 2023, with overshoots to
$125 a barrel in 2022 and $150 a barrel in 2023 likely, the bank
said.
(Karen Brettell)
*****
EUROPEAN STOCKS: NIBBLING ON THE DIP (1155 ETD/1655 GMT)
Glass half full: investors bought the dip!
Glass half empty: investors didn't buy much of it!
European stocks ended the day up 0.7% which isn't much of a
rebound considering the 3.7% hit the pan-European STOXX 600
suffered on Friday.
"Dip buyers are emerging across a host of sectors, and as
ever it will take a while for the market to claw back all the
losses suffered last week", wrote Chris Beauchamp, Chief Market
Analyst at IG.
As some analysts cautioned today, there are so many
unanswered questions about the omicron variant that a 'wait and
see' strategy is probably proving a popular option among
investors.
Anyhow, much of the credit for the limited bounce back is
due to oil prices which have lifted energy stocks, the clear
winners of the session with a 2% jump.
Travel and Leisure shares also made a comeback with a 1.8%
rise but again, that's small change in comparison with the 8.8%
drop on Friday.
As a sign of the lack of conviction for the sector, hotel
operator Accor and BA owner IAG lost 0.8 and 0.3% respectively.
Some of today's tech frenzy on Wall Street has washed on
European shores but without much enthusiasm: the sector's index
rose 1.6% while the S&P technology jumped 2.2%.
Car makers were the worst performers with the sector losing
0.3%, dragged down by France's Faurecia, down 7.9%, which cut
its guidance for the second time this year.
(Julien Ponthus)
*****
HOMES FOR THE HOLIDAYS: PENDING HOME SALES JUMP TO 10-MONTH
HIGH (1105 ET/1605 GMT)
Housing market data released on Monday supported the notion
that the sector, despite slowing down under the weight of its
own success, still has some gas in the tank.
Pending sales of pre-owned U.S. homes surged by
7.5% last month, blasting past consensus and posting a decisive
rebound from September's 2.4% decline, according to the National
Association of Realtors (NAR).
The increase sent the index to its highest print in ten
months, where it hovers well above pre-COVID levels.
"This solid buying is a testament to demand still being
relatively high, as it is occurring during a time when inventory
is still markedly low," writes Lawrence Yun, NAR's chief
economist.
Indeed, while the initial threats - and resulting lockdowns
- surrounding the pandemic have waned, its effects don't appear
to be going away any time soon, as evidenced the new Omicron
variant.
As a result, demand for elbow room and home office space
remains robust, with many potential buyers finding additional
impetus in the form of rising rents and interest rates.
"Motivated by fast-rising rents and the anticipated increase
in mortgage rates, consumers that are on strong financial
footing are signing contracts to purchase a home sooner rather
than later," Yun added.
The initial suburban flight drove inventories to record
lows, even as homebuilders struggled replenish those inventories
as they wrestled with land scarcity and a hobbled supply chain.
These factors launched home prices into the stratosphere,
and beyond the grasp of many potential buyers, particularly and
the lower end of the market.
But as Rubeela Farooqi, chief U.S. economist at High
Frequency Economics points out, inventories and home prices have
both shown recent signs of easing.
"Inventories, while they have declined over the last three
months, have moved up from lows earlier this year," Farooqi
says. "Gradually easing supply constraints should be a positive
for existing home sales over time."
As a potential home sale is counted as 'pending' once the
contract is signed, the data acts as a fairly accurate predictor
of actual home sales a month or two down the line.
So, much like the Commerce Department's building permits
report, which also showed a nice rebound in October, pending
home sales is among the sector's most forward-looking
indicators.
But the stock market is the most forward-looking indicator
of them all, reflecting where investors believe the housing
sector will be six months to a year down the road.
For nearly the first year of the pandemic, the Philadelphia
SE Housing index and the S&P 1500 Home Building index
handily outshone the broader S&P 500.
But as shown in the graphic below, index performance rebased
to a year ago shows that relationship has since converged,
although the SPCOMHOME has gained an edge of late, nicely
echoing the recent uptick in the NAHB's Homebuilder Sentiment
index.
Wall Street was heading sharply higher before the data hit,
rebounding from Friday's steep sell-off due to renewed pandemic
fears in the form of our newest addition to the common
vocabulary 'Omicron.'
But the perennial stay-at-home plays, namely market leading
tech megacaps, have since taken a decisive lead, pushing the
Nasdaq to the head of the pack.
(Stephen Culp)
*****
RECOVERING FROM OMICRON? GIVE MARKETS 10 DAYS! (0959 ET/1559
GMT)
Even though markets have quickly switched from panic selling
to dip-buying, main equity benchmarks remain well below the
levels they were at before Omicron jitters wiped $2 trillion off
stock markets worldwide.
At this point one may wonder how long could it possibly take
for a complete recovery?
To answer that, Mediobanca looked at market behaviour in
October last year when the Delta variant was first spotted.
Back then, it took 10 days to rebound and reach new highs,
it says, which suggests that this time around the recovery
process should be faster, given that the number of vaccinated is
much higher and the time to market of new shots is shorter.
"We might be back to highs quite soon," the Italian
investment bank wrote in an email to clients.
(Danilo Masoni)
*****
U.S. FUTURES BOUNCING AFTER OMICRON SELL-OFF (0815 ET/1315
GMT)
U.S. equity index futures were pointing towards a higher
open on Monday, after Friday's sharp sell-off in a shortened
post-Thanksgiving holiday session fueled by the finding of a new
coronavirus mutation in South Africa.
A top South African infectious disease expert said on Monday
that existing COVID-19 vaccines should be highly effective at
preventing severe disease and hospitalization from the new
variant, named Omicron, and U.S. President Joe Biden was due to
update the public on the new variant and the U.S. response later
in the day.
The Dow Industrials suffered its biggest one-day
percentage decline since October 2020 and the S&P 500 saw
its biggest daily percentage drop since February 25 on Friday,
as concerns about the new variant rattled markets, although many
analysts said the selling was likely exacerbated by the light
volume trading session.
After slumping about $10 a barrel on Friday, oil prices were
rebounding by about 5% while travel-related stocks such as
American Airlines and Norwegian Cruise Line
also gained ground after tumbling on Friday.
Below is your premarket snapshot:
(Chuck Mikolajczak)
*****
FOR MONDAY'S LIVE MARKETS' POSTS PRIOR TO 0830 EST/1330 GMT
- CLICK HERE: