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Nasdaq edges green, S&P 500 slips, DJI off ~0.3%
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Cons disc leads S&P decliners; energy up most
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Euro STOXX 600 index ~flat
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Dollar ~flat; gold, bitcoin rise slightly; crude up ~2%
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U.S. 10-Year Treasury yield ~flat at 3.63%
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JUST A SPECULATIVE REBOUND IN A BEAR, NOT A NEW BULL -MORGAN
STANLEY WM (1101 EST/1601 GMT)
The debate goes on as to whether bear-market lows were seen last October, or if recent strength will prove counter-trend and fleeting.
As Lisa Shallet, CIO of Morgan Stanley Wealth Management
(WM), sees it, current U.S. equity dynamics "suggest a
liquidity-driven speculative rebound within a bear market, not a
new bull."
According to Shallet, leadership has been low-quality,
skewed toward cyclicals and dominated by reversal trades,
affirming conviction in an economic soft landing and skepticism
regarding the Fed's resolve.
However, she says that her analysis does not support this
narrative, nor do other asset classes. Shallet points to U.S.
Treasury curves, which are sharply inverted and growing more so,
which imply a hard landing.
Additionally, she says that gold's outperformance suggests
bigger risk premiums are warranted and that real rates are not
poised to reflate.
Energy commodities, as well, are not yet confirming a soft
landing thesis, as greater demand from China is projected to
countered by weaker H2 U.S. demand.
"Watch for yield curve steepening, weaker gold and energy
price strength, which would confirm the soft landing/second half
growth-rebound story," Shallet wrote in a note out Monday.
She favors short to intermediate U.S. Treasuries,
municipals, investment grade corporates and dividend-growth
stocks with above average yields and decent earnings
achievability amid economic slowdown.
Meanwhile, Mike Wilson, equity strategist at Morgan Stanley,
is also expressing the view that it's too soon to call an end to
the bear.
(Terence Gabriel)
*****
U.S. STOCKS ADD TO RECENT LOSSES EARLY (1005 EST/1505 GMT)
Major U.S. stock indexes are modestly lower early on
Tuesday, extending recent market losses, with shares of
Amazon.com , Home Depot and Tesla among
the biggest drags on the S&P 500 .
Consumer discretionary is leading declines among
S&P 500 sectors, while energy is out front of the
gainers.
Shares of Home Depot are down 2%, while Amazon.com is down
3.3% and Tesla is off 0.7%.
Investors await Federal Reserve Chair Jerome Powell's
discussion this afternoon with David Rubenstein, chairman of the
Economic Club Of Washington.
At the same time, the market is digesting fourth-quarter
earnings reports that have so far mostly added to concerns that
higher interest rates are affecting demand for U.S. companies.
Here is the early market snapshot:
(Caroline Valetkevitch)
*****
NASDAQ COMPOSITE: BULLISH MOMENTUM BUILDS (0900 EST/1400
GMT)
One measure of the Nasdaq's internal strength, the
Nasdaq New High/New Low (NH/NL) index , on a monthly
basis, continues to improve. This can suggest that the
Composite's recent strength may have more legs:
The NH/NL index, on a monthly basis, plunged to 14.5% in
October, which was its weakest reading since 10.3% in March
2009.
The measure ticked up in November, and has now advanced to
29.9%, putting it on track to rise for a fourth-straight month.
Looking back to the late 1990s, this measure has tended to
form V-bottoms around the time of some of the Nasdaq's most
significant lows. For example, its March 2009 trough coincided
with the end of a Nasdaq collapse of as much as 56%.
Bulls will want to see this internal measure continue to
rise. Its 10-month moving average (MMA), now 20.7%, can act as
support on weakness.
A break below the 10-MMA may see the measure once again
threaten the 14.5%-10.3% zone, putting the Nasdaq at risk for a
much deeper decline.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
