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DJI ~flat, S&P 500 slips, Nasdaq off >0.5%
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Real estate weakest S&P 500 sector; energy leads gainers
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Euro STOXX 600 ~flat
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Dollar slips; gold flat; crude, bitcoin gain
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U.S. 10-Year Treasury yield falls to ~3.51%
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KEEP A CLOSE EYE ON SHORT-TERM BOND YIELDS (1103 EDT/1503 GMT) Global financial markets have calmed after the banking crisis in March. However, as Bob Doll, chief investment officer at Crossmark Global Investments, sees it, the key to sustaining what has become a choppy risk-on phase since late last year is for interest rate expectations and bond yields to stay quiet. "A close monitoring of short-term bond yields is warranted, because a breakout in short-term yields would likely be the catalyst for higher long-term yields and, therefore, an end to the risk-on phase, writes Doll in his latest "Deliberations." Doll also outpoints that recent U.S. economic data has been mixed, and the economy remains in "a modest deceleration phase." However, he believes that Fed will not be able to get inflation back to 2% without triggering a recession. Additionally, he thinks U.S. commercial real estate presents a potential catalyst for ending the cycle. That said, even though most central banks should soon pause, Doll believes that the conditions for rate cuts will not materialize in 2023. Thus, he believes that current rate cut expectations will unwind in the second half of this year.
"In fact, the odds are tilted towards an eventual resumption in rate hikes if our view of stick core inflation pans out. Relative prospects for select non-U.S. assets and currencies are still positive."
(Terence Gabriel)
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QUIET START TO A BUSY WEEK (1001 EDT/1401 GMT)
Major U.S. averages are all around flat in the early stages of trading on Monday with a deluge of corporate earnings due this week while economic data includes the Q1 advance reading of GDP and personal consumption expenditures (PCE) data.
On the earnings front, 12 Dow components and 178 companies in the S&P 500 are scheduled to report earnings this week, including mega-cap names such as Google parent Alphabet , Microsoft and Amazon , according to Refinitiv data.
Coca-Cola shares are up about 0.5%, giving up some gains from premarket trading, after posting first-quarter earnings and revenue that topped expectations.
On the sector front, energy paced gains in the early going with NYMEX crude futures now up more than 1%. Real estate is the weakest of the 11 major S&P sectors.
Below is your market snapshot:
(Chuck Mikolajczak)
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S&P 500 INDEX: STILL LOST IN THE CLOUDS (0900 EDT/1300 GMT)
The S&P 500 index continues to probe some major chart
barriers. And last week's 0.1% dip provided little clarity for
traders as they remain focused on one big billowy cloud on the
horizon.
The SPX hit a high last Tuesday of 4,169.48 before closing
out the week at 4,133.52. Thus, the benchmark index continued to
flirt with the upper edge of the weekly Ichimoku cloud, which
resides around 4,155:
Ichimoku cloud is technical indicator which displays support
and resistance, identifies trends, and measures momentum.
Utilizing midpoints of ranges, a number of lines are generated.
Two of these lines are used to create cloud boundaries. The
entire cloud is shifted forward in time in order to provide a
glimpse of future support and resistance.
Once the SPX broke below the cloud in May of last year, it
has failed to reclaim on a weekly closing basis. Indeed, rallies
failed in early-June, mid-August, mid-December, and in
early-February of this year.
Thus, the 4,155 level marks a key hurdle.
Add in additional resistance at the early-February high at
4,195.44, the 23.6% Fibonacci retracement of the March
2020-January 2022 advance at 4,198.70, the Fed-Chair Powell
August-26 Jackson Hole speech high at 4,203.04, and the 100-week
moving average, which ended Friday at 4,203.27, and bulls may
have their heads in the clouds if they expect the SPX will be
able to continue to advance.
That said, clearing these barriers will have the potential
to add credence to the view that the SPX saw a major low in
October, and suggest that its trend inflection is only
strengthening.
A sharp break to the downside can put the lower cloud base,
which is now around 3,850, as well as the 38.2% Fibonacci
retracement of the March 2020-January 2022 advance at 3,815.20,
and the March trough at 3,808.86, at risk.
(Terence Gabriel)
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FOR MONDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
