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U.S. equity indexes slightly red
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Energy weakest S&P 500 sector; staples lead gainers
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Euro STOXX 600 index down ~0.5%
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Dollar, gold ~flat; crude falls >1%; bitcoin off >2%
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U.S. 10-Year Treasury yield falls to ~3.92%
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U.S. EQUITIES VACILLATE IN EARLY TRADE (1010 EST/1510 GMT)
Wall Street's main indexes opened higher on Wednesday,
reversing course slightly after the previous session's decline.
That said, initial strength has quickly faded, with the
indexes now slightly red.
On Tuesday, the indexes had incurred their biggest one-day
percentage losses so far in 2023 with the S&P 500 and
Nasdaq Composite showing their third straight losing
sessions, while the Dow Jones Industrial average wiped
out its gains for the year-so-far.
Among S&P 500's 11 major sectors on Wednesday, energy is the biggest loser, while staples are
showing the biggest rise.
Investors will monitor later on Wednesday the release of
minutes from the Federal Reserve's last policy meeting, which
will show details of the debate within the U.S. central bank
over how much further interest rates may need to rise to slow
inflation.
Here is a snapshot of where markets stood shortly around
1005 EST:
(Sinéad Carew)
*****
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)
*****
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)
*****
FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400
GMT - CLICK HERE
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
