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Main U.S. indexes advance: Nasdaq up ~1.8%
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Comm svcs leads S&P 500 sector gainers; staples sole loser
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Euro STOXX 600 index off ~0.3%
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Dollar lower; gold, crude, bitcoin gain
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U.S. 10-Year Treasury yield edges down to ~3.47%
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BOUNCE ATTEMPT (1016 EDT/1416 GMT) Major U.S. indexes are higher in the early stages of trading on Thursday as they attempt to bounce from 1.6% declines across the three major indexes on Wednesday following the Federal Reserve's 25 basis point rate hike and comments from U.S. Treasury Secretary Janet Yellen about blanket insurance for banking deposits.
Growth names are leading the charge higher, with communication services and tech the best performing of the 11 major sectors as U.S. bond yields eased with the Fed being seen as close to a pause on rate hikes. Banks are up about 1% after dropping 3.7% on Wednesday, while the beleaguered regional banks are roughly flat following a tumble of more than 5% in the prior session.
Below is your market snapshot:
(Chuck Mikolajczak)
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J&J'S 'HOT POTATO' APPEAL REACHES SUPREME COURT (0915 EDT/ 1315 GMT)
The U.S. Supreme Court is unlikely hear Johnson & Johnson's appeal to resolve its LTL Management unit's bankruptcy as the former could be reluctant to clash with the U.S. Congress, Bernstein analysts say.
J&J said on Wednesday that it would appeal to the SCOTUS to review the bankruptcy of LTL Management as the pharmaceutical giant seeks to use the bankruptcy to halt more than 38,000 lawsuits alleging that company's talcum powder products were contaminated with asbestos, a carcinogenic, which J&J denies.
"The case is a hot potato that has drawn quite a bit of political attention. While we would love to see the Supreme Court force Congress's hand on tort reform, we think it's much more likely SCOTUS will kick the case back to the tort system," Bernstein analysts said in a research note. The bankruptcy strategy stumbled in January, when the 3rd U.S. Circuit Court of Appeals based in Philadelphia ruled that LTL's bankruptcy should be dismissed because neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in "financial distress." Given that J&J ended 2022 with $24 billion in cash on the balance sheet, a tentative payout of $11.5 billion represents less than six months of the company's free cash flow according to Bernstein's estimates. "It will take some time for the Supreme Court decision to come, and assuming the court declines to hear JNJ's case, it will take many years for talc cases to work their way through the courts. This litigation overhang on the stock could last a long time," Bernstein said.
(Tejaswi Marthi)
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FANGS SHARP AGAIN (0900 EDT/1300 GMT) 2022 was an especially rough year for high-P/E growth stocks. However, that's all changed so far in 2023. S&P 500 growth is back to outperforming S&P 500 value . In fact, growth has now extended its record run of gains vs value to 14-straight days. No doubt, growth owes its outperformance to the resurgence of tech , while at the same time financials , and especially banks , have been battered.
Of note, however, tech titans, as defined by the NYSE FANG+ index , have really turned it around in 2023. NYFANG is equal-weighted and includes the six core FAAMNG stocks: Facebook-parent Meta Platforms , Apple , Amazon.com , Microsoft , Netflix and Alphabet . It also includes another four actively-traded tech giants: Advanced Micro , Nvidia , Snowflake and Tesla . After suffering its only losing year ever in 2022, NYFANG is up nearly 31% so far this year. This vs a 15% year-to-date advance for the tech sector, an 11.5% Nasdaq gain, and a 2.5% S&P 500 index rise. NYFANG traded at an 11-month high of 6,033.50 on Wednesday before selling off and ending at 5,812.55:
Traders will want to see a weekly close above the 38.2% Fibonacci retracement of the March 2020-November 2021 advance, at 5,930, to suggest potential for a greater recovery. The rising 10-week moving average, now around 5,485, and the 50% retracement of the March 2020-November 2021 advance, at 5,266, are now support.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
