*
Major U.S. indexes green, but off early highs
*
Energy, Financials lead S&P 500 sector gainers; utilities weakest
*
Euro STOXX 600 index closes up 1.4%
*
Dollar ~flat; crude, bitcoin gain; gold down >1.5%
*
U.S. 10-Year Treasury yield rises to ~3.56%
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
DIG INTO INDUSTRIALS -CARSON GROUP (1215 EDT/1615 GMT) The market has been consumed with banking sector woes, but the Carson Group (CG) is taking a breather from that focus, and instead taking a look at the industrials sector. Carson Group is overweight industrials due to a combination of favorable economic and fiscal policies, solid fundamentals, and reasonable valuations. Last year, CG says industrials outperformed, falling just 5.5% vs a 18.1% decline in the total return for the S&P 500 . And now, they think industrials are primed to continue performing well over coming years. According to Carson Group, demand has rebounded strongly since the pandemic, and supply chain bottlenecks appear to be lifting.
"This, coupled with the movement to re-shore manufacturing, favorable fiscal policies like the 2021 Infrastructure Investment and Jobs Act, and rising military budgets from the Russia/Ukraine war, bodes well for future growth." Carson Investment Research's bottom line is that industrials should benefit from continued healthy economic growth, constructive commodity prices, rising defense spending, and favorable government programs that are encouraging re-shoring manufacturing back to the U.S.
"Valuations aren’t demanding, especially considering the expectations for double-digit growth in earnings and free cash flow over the next three years."
(Terence Gabriel)
*****
HOUSE WARMING: EXISTING HOME SALES SNAP 12-MONTH LOSING STREAK (1055 EDT/1455 GMT) It would appear that the housing market, having descended to its dank basement, has found the rickety stair way leading up to ground level.
Sales of pre-owned U.S. homes surged by 14.5% last month to 4.58 million units at a seasonally adjusted annualized rate, marking a robust bounce after 12 consecutive months of declines. The report from the National Association of Realtors (NAR) blew past the 5% consensus and landed 9% above the 4.20 million units SAAR analysts anticipated. It was the largest monthly increase since July 2020, when a pandemic-driven flight to the suburbs was causing the housing market to explode. Inventories landed at 2.6 months supply, down 10.3% from January but an improvement over the 1.7-month reading from a year ago. "Inventories are higher and prices are lower from record lows recorded last year," says Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "An easing of mortgage rates ... could provide support to home sales." "But affordability remains a key constraint for buyers." Recent upticks in mortgage demand and homebuilder sentiment, along with unexpected increases in housing starts and building permits, have hinted that the sector - battered by depressed inventories, skyrocketing prices and rising interest rates - might have found its basement. "Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines," writes Lawrence Yun, chief economist at NAR. "Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."
But while housing indicators look in the rear view mirror, the stock market looks down the road, to where investors expect the sector to be six months to a year from now. While the Philadelphia SE Housing index and the S&P 1500 Home Building index underperformed the broader market for much of 2022, when rebased to twelve months ago against the S&P 500 that relationship started to diverge in November:
Wall Street is in a generally good mood, with all three major U.S. stock indexes comfortably green, albeit off early session highs. Energy and financial stocks are leading the way, with banks in particular having a grand time continuing Monday's rebound, jumping nearly 4%.
(Stephen Culp)
*****
U.S. STOCKS RALLY IN EARLY TRADE WITH FED EYED (1008
EDT/1408 GMT)
Major U.S. averages are showing solid gains in the early
portion of trading on Tuesday, with the S&P 500 and
Nasdaq Composite up around 1%, while the Dow Industrials are not far behind as concerns about banks waned and the
focus begins to turn to the Fed policy announcement tomorrow.
Equities rallied to
start the week as the weekend deal to rescue Credit Suisse and moves by central banks to bolster the financial system helped ease recent fears about contagion.
The S&P 500 banks index is up about 4% and on pace for its biggest one-day percentage gain since November 10. The index had plunged more than 21% over the prior two weeks as worries about the stability of the banking system grew. The KBW Regional Bank index is also up about 4% and on track for its biggest one-day percentage gain since October 4.
The concerns about the banks threw expectations about the Fed's policy announcement into flux. After expectations were trending toward a 50 basis point hike before the bank fears surfaced, expectations for a 25 basis point hike now stand at over 80%, according to CME's Fedwatch Tool, while many major banks made last minute adjustments to their Fed forecasts.
On the economic front, data showed existing home sales increased for the first time since January 2022.
Below is your market snapshot:
(Chuck Mikolajczak)
*****
NYCB'S DEAL FOR SIGNATURE BANKS ASSETS: NOTHING TO LOSE (0915 EDT/1315 GMT) New York Community Bancorp's move to buy deposits and loans from doomed Signature Bank is largely being perceived as a win, with analysts noting that it could boost NYCB's earnings.
"We believe the stock's very favorable response to the transaction captures the estimated financial benefits of the transaction," analysts at JP Morgan said. Shares of New York Community Bancorp have climbed nearly 32% since the deal was announced on Monday, bucking the gloomy trend that was triggered by the collapse of some U.S. midsized lenders last week. NYCB is up 7.3% to $9.24 in premarket trade. Shares of PacWest Bancorp are up 12.5% premarket, while First Republic Bank is jumping 26.7% after fears over the regional lender's health pushed its stock to an all-time low in the previous session. Post the deal, JP Morgan has hiked its fiscal 2023 and 2024 EPS view for NYCB by 19.5% and 29.8%, respectively.
NYCB, which had a significant amount of higher-cost wholesale borrowings in the fourth quarter of last year, "will use the acquired cash to greatly reduce higher-cost wholesale borrowings," said Credit Suisse analysts.
"We believe the ongoing integration of Flagstar Bancorp and the now assumed Signature operations remains critical. Minimizing client and employee attrition, particularly from Signature, will be critical to achieving the longer term financial benefits of the transaction," said RBC analysts. Ratings agency Fitch also said that the bank's ratings would be unaffected by the purchase of the portion of Signature Bank.
Amid the stress brought on by the recent banking crisis and rising interest rates, the acquisition adds to some relief that UBS Group AG's takeover of the troubled Credit Suisse Group AG would avert a wider banking crisis.
(Tejaswi Marthi)
*****
NASDAQ COMPOSITE: PINCHED IN (0900 EDT/300 GMT) The Nasdaq Composite has been leading the way higher in 2023. The tech-heavy index is up nearly 12% so far this year vs about a 3% rise for the S&P 500 index . Of note, however, for most of this year, the IXIC has been trapped between two converging Fibonacci-based moving averages on the weekly charts:
Indeed, since reclaiming its rising 233-week moving average (WMA) on a weekly closing basis on January 13, the Composite has been using it as support.
Last week, amid intense market stress, the IXIC hit a low of 10,982, which put it just around 15 points above its 233-WMA. The Composite then vaulted higher. With Monday's 11,675 finish, the index is up more than 6% off last week's low. However, on the upside the IXIC is just shy of its descending 55-WMA, which is now resistance around 11,730. Since ending the week below the 55-WMA on January 21, 2022, the IXIC has managed only one weekly close back above it. On February 3 of this year, it ended above it by less than 10 points. Thus, with these two moving averages pinching together, traders will be watching for what appears to be any more decisive weekly closing penetration of the 55-WMA, or weekly closing violation of the 233-WMA. Above the 55-WMA, additional hurdles are in the 12,250-12,270 area, while below the 233-WMA, support resides in the 10,291-10088 area.
(Terence Gabriel)
*****
FOR TUESDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
IXIC03212023 Early trade March 21 Existing home sales Housing stocks ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
