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Nasdaq up ~1%, S&P 500 ~flat, DJI dips
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Tech jumps to lead S&P sector gainers; healthcare weakest
group
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Euro STOXX 600 index down ~1.2%
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Dollar, crude decline; gold edges up; bitcoin up >5%
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U.S. 10-Year Treasury yield edges down to 3.39%
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THE DIVIDENDS ARE COMING (1015 EDT/1415 GMT) S&P Global Market Intelligence has forecasted that 67 components, or 13.4%, of the S&P 500 will increase their dividends at their next announcements.
S&P projected the hikes by considering prior dividend histories, current news events, corporate guidance, estimated free cash flow, revenue estimates, debt ratios, capital expenditures and other factors, with each forecast coming with a "confidence level" to gauge the certainty of the analyst for the increase.
Many companies in the S&P 500 took advantage of the near-zero rates during the COVID-19 pandemic to keep financing costs manageable, according to Ryan Boyd, Market Intelligence head of business development for the Americas. As such, dividends should be able to stay resilient in the face of a slowing economy and higher borrowing costs.
Recent layoffs, such as those seen in the tech and financial sector, will provide a cost reduction and give an added buffer if companies believe they need to mitigate risk to shareholder returns, according to Boyd.
On a sector basis, 12 of the 37 companies, or 32.4%, in the consumer staples sector are forecast to hike dividends, the highest among the 11 major S&P sectors. The second highest sector is materials with 20.7% of the components seen increasing their dividends.
Utilities are expected to have the smallest dividend growth, at 6.7%.
As for individual companies, S&P sees UnitedHealth announcing a roughly $2.00 per share dividend, or a 21.2% increase, in June as the managed care company has boosted its divided over the last several years, with a five-year average growth rate of 19%.
The next largest are expected to be Goldman Sachs and Citigroup with increases of 20% and 19.6%, respectively.
(Chuck Mikolajczak)
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NASDAQ BREADTH HAS BEEN WHEEZING (0900 EDT/1300 GMT) It's no secret that a handful of tech-titans have been the driving force behind the market's 2023 gains. Indeed, the Nasdaq 100 index is sporting a year-to-date rise of more than 16%, while its equal-weighted version has risen just over 9%. The benchmark S&P 500 is up just over 6%. Meanwhile, of note, since early February, the Nasdaq daily advance/decline (A/D) line has been sharply diverging from the Nasdaq Composite :
The divergence between this market breadth measure and the IXIC has been highlighting the lack of participation under the surface. Unlike the Composite, which saw its 50-day moving average (DMA) cross above the 200-DMA in mid-March, the A/D line's intermediate-term moving average failed to confirm this event and rolled under the longer-term moving average.
And now, the A/D line is threatening its late-2022 trough. E-mini Nasdaq 100 futures are trading up around 1% ahead of Wednesday's open. However, it may be critical to see the advance broaden, and the A/D line quickly get back in gear to the upside with the Composite. Ultimately, weakness in the great mass of Nasdaq stocks exposes the IXIC to risk of a sharp decline in the event of tech-titan exhaustion.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
