May 19 - 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
THE DAY EUROPEAN STAPLES WENT DOWN (1012 EDT/1412 GMT)
Only time will tell if the historic drops sustained by Walmart and Target were defining moments in this inflation-fueled market cycle, but there are other worrying signs on the other side of the pond that consumers are struggling to cope with.
Europe's food and beverages index, is falling well over 4%, it's worst performance since March 2020.
The index is home to major consumer staple groups such as Switzerland's Nestle, the UK's alcohol beverages group Diageo, and Dutch beer maker Heineken.
These stocks are down 5.1%, 5.3% and 4.8% respectively and other big names, such as Belgium's brewer AB Inbev or Denmark's Carlsberg are losing over 3%.
(Julien Ponthus)
S&P 500 FLIRTS WITH BEAR-MARKET TERRITORY (0955 EDT/1355 GMT)
Major U.S. indexes are under pressure in early trade on Thursday after the S&P 500's biggest rout this year in the previous session, as investors fret over the impact of surging inflation on the economy and corporate earnings.
With the weakness, the S&P 500 index, at around 3,880, is nearing its May 12 intraday low at 3,858.87, and the 38.2% Fibonacci retracement of its March 2020-January 2022 bull-phase at 3,815.20.
The benchmark index is currently down 19.1% from its January 3 record finish, putting it close to bear-market territory, or a 20% decline from its high on a closing basis.
Here is where markets stand in early trade:
(Terence Gabriel)
GOLDMAN SACHS RECESSION GUIDE: GO ON THE DEFENSIVE (0918 EDT/1318 GMT)
Economists at Goldman Sachs estimate a 35% probability that the U.S. economy will enter a recession during the next two years, and they believe the yield curve is pricing a similar likelihood of a contraction.
GS notes that rotations within the U.S. equity market indicate that investors are pricing rising risk of a downturn compared with the strength of recent economic data.
Defensive sectors and "quality" factors have generally outperformed during the 12 months before the start of a recession, GS says, pointing to data from across 5 recessions since 1981 showing energy, consumer staples, healthcare and utilities outperforming the index.
So far, the energy sector is the sole year-to-date gainer, rising more than 46%. Utilities, staples and healthcare are posting the smallest losses so far this year.
Additionally, GS notes dividend futures markets imply S&P 500 dividends will decline by nearly 5% in 2023. In the last 60 years, S&P 500 dividends have only fallen during a recession.
Separately, Barclays strategists also said margins for U.S. companies and their forward earnings were under pressure due to a combination of factors, ranging from severity of China's COVID lockdowns to the war in Ukraine and the U.S. Federal Reserve's hawkish stance.
(Shreyashi Sanyal)
NASDAQ COMPOSITE: ABOUT TO CATCH ITS BREADTH? (0900 EDT/1300 GMT)
The Nasdaq Composite has certainly been wheezing of late. The tech-laden index has lost about 22% of its value just since early April, and on Wednesday it ended down 29% from its November record close. And with CME e-mini Nasdaq 100 futures under pressure in premarket trade, the Composite appears set to start out the day on the back foot again.
Meanwhile, the Nasdaq McClellan Summation (McSum), which is a measure of internal strength based on advancing and declining issues, has been especially weak. However, with Wednesday's -6,893 finish, this measure is reaching important support :
The McSum bottomed in late-January at -7,229, which was just below its late-2008 trough at -6,896. The late-January bottom also came as the measure slipped just slightly below a support line from late-2012. That line contained weakness in late 2018 and again in early 2020, essentially coinciding with major lows in the Composite. That line now resides around -7,250.
Therefore, with important support running from -6,896 to around -7,250, the McSum may be very close to another low.
It's always possible the McSum could languish at historically low levels. However, of note, the measure's tendency has been to form V-bottoms. Therefore, a sharp thrust back above its descending 10-day moving average (DMA), which ended Wednesday at -6,442, may confirm pressure is coming off the downside, and suggest potential for a sustained rally.
Using Refinitiv data back to mid-1995, the McSum's all-time low was -8,905 in September 1998.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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