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U.S. equity index indexes open higher, Nasdaq out front up ~0.4%
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Euro STOXX 600 index down ~0.36%
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Dollar ~flat; gold edges up; crude dips; bitcoin sinks
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U.S. 10-Year Treasury yield edges down to ~3.92%
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A IS FOR ALPHA [0930 EST/1430 GMT]
As markets move away from 2022’s macro-driven environment to
more stock-specific drivers, hedge fund returns are likely to
benefit this year, Goldman Sachs strategist Ben Snider and
colleagues wrote in a note.
The equity market rally since the start of the year and
strong performance of the most popular hedge fund long positions
have lifted the funds average return to 3% in early 2023,
compared to a 4% loss last year, based on Goldman Sachs data
looking at a sample of 758 hedge funds with $2.3 trillion of
gross equity positions.
"Falling stock correlations and rising equity return
dispersion in recent months signal an improvement in the alpha
generation environment," they said, adding that this will bode
well for fundamental stock-pickers.
Big tech and growth names such as Microsoft Corp and Amazon.com Inc remained the two most popular hedge fund long positions despite a decline in popularity of those stocks last quarter, while Tesla dropped off the list completely. Overall, hedge funds continued their rotation from value sectors like energy, industrials and materials towards growth sectors such as technology, communication services and consumer discretionary stocks.
Hedge fund leverage has also rebounded since the start of the year, the strategists said, and so have hedge fund equity market exposures. "While restrained net exposures suggest hedge funds have not fully embraced the market rally, gross exposures near record highs show funds positioned to take advantage of an increasingly micro-driven market," said Snider and the Goldman Sachs strategists.
(Bansari Mayur Kamdar)
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S&P 500 INDEX: RATTLED BY RATES BUT NOT YET WRECKED (0900
EST/1400 GMT)
The S&P 500 index suffered its biggest percentage
decline of the year on Tuesday as the U.S. 10-Year Treasury
yield neared 4% as rate worries rattled Wall Street.
Attention now turns to the release of the latest FOMC
minutes at 2 PM EST Wednesday as market players try to get a
better handle on what the Fed may be thinking in terms of its
rate-hike path.
Meanwhile, e-mini S&P 500 futures are edging up in
premarket trade, suggesting the SPX may regain around 5 points
at the open.
With its 2% drop on Tuesday, the benchmark index hit a low
of 3,995.19 before ending at 3,997.34. This has traders eyeing a
number of nearby support levels:
The support line from the October trough should come in
around 3,985 on Wednesday, while the rising 50-day moving
average (DMA) should ascend to around 3,980.
Below here, the January 25 low was at 3,949.06. The 200-DMA
should reside around 3,940, while the broken resistance line
from the SPX's record high, which should now act as support, at
around 3,930.
If the decline from the early-February high is to prove to
be just a pause in a developing advance, bulls will want to see
these levels contain weakness, otherwise chart damage can turn
more severe.
The January 30 low at 4,015.55 now offers initial resistance
ahead of the February 10 low at 4,060.79.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
