* S&P, Nasdaq ~flat; Dow modestly negative
* Energy, materials lead S&P sector gainers
* Utilities weakest group
* Crude up >2%; gold, dollar ~flat
* U.S. 10-Year Treasury yield ~1.20%
Feb 12 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
SOLIDLY ON TRACK FOR PROFIT GROWTH (1411 EST/1911 GMT)
As of Friday, S&P 500 companies seemed solidly on track to post a year-over-year earnings gain for the fourth quarter of 2020, with estimated growth for the quarter improving even further in the latest week, according to IBES data from Refinitiv.
Based on actual results from 372 companies and estimates for those yet to report, earnings are now projected to have risen 3.4% in the quarter. At the start of the year, analysts projected a 10.3% decline in earnings for the quarter, the data showed, due the impact of the coronavirus pandemic.
"The earnings recovery has been substantially more robust than we could have imagined when the pandemic first took hold," Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities in New York, wrote in note.
"4Q20 EPS has now surpassed prior year levels (the result of a 16% surprise), and 4-quarter rolling EPS is expected to hit records in 2Q21."
(Caroline Valetkevitch)
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BEARS' CLAWS CLIPPED (1212 EST/1712 GMT)
The percentage of individual investors characterizing their short-term outlook as “bearish” hit a six-week low in the latest American Association of Individual Investors Sentiment Survey (AAII). With this, optimism snapped back, while neutral sentiment gained.
AAII reported that bearish sentiment, or expectations that U.S. stock prices will fall over the next six months, slid 9.3 percentage points to 26.3%. Pessimism is below its historical average of 30.5% for the first time this year.
Bullish sentiment rebounded 8.1 percentage points to 45.5%. Optimism is above its historical average of 38.0% for the 11th week out of the past 13 weeks.
Neutral sentiment increased 1.2 percentage points to 28.3%. Neutral sentiment remains below its historical average of 31.5% for the 53rd time out of the past 56 weeks.
With these changes, the bull-bear spread jumped to +19.2 from +1.8 last week :
In this week's special question, AAII asked its members to share their thoughts about the level of optimism being reflected in the stock market.
Nearly two out of five respondents (39%) said that there is too much optimism and that they believe there will be a correction.
This compares to 30% of respondents who stated that they are confident in the current level of optimism.
(Terence Gabriel)
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SNOW DAZE: CONSUMERS SEE MORE SHOVELING AHEAD - UMICH (1105 EST/1605 GMT)
The U.S. consumer's outlook grew chillier this month, as a prolonged vaccine rollout and ongoing pandemic-related restrictions soured expectations.
This, despite the prospect of President Joe Biden's robust stimulus package in the offing.
University of Michigan's preliminary take on February consumer sentiment unexpectedly fell by 2.8 points to a reading of 76.2, defying analyst expectations for a uptick to 80.8.
The somber mood was echoed earlier this week by U.S. Federal Reserve Chairman Jerome Powell. On Wednesday, Powell sounded a call for a broad push by the government and the private sector to help U.S. workers get back on the job, with particular emphasis on hard-hit minorities and lower earners.
While the American consumer, who contributes about 70% to U.S. GDP, grew slightly more wary of current conditions, the overall number was dragged down by a plunge in near-term expectations, particularly among households earning less than $75,000.
The wealth divide in sentiment is stark, writes Richard Curtin, chief economist of UMich's Surveys of Consumers. "Households with incomes in the bottom third reported significant setbacks in their current finances," he writes.
"When asked to assess their current financial position, the deep divisions become apparent: among those with incomes in the bottom third, just 23% reported improved finances, the lowest since 2014," says Curtin. "In contrast, among those with incomes in the top third, 54% reported their finances had improved."
The following chart shows headline UMich data, along with the expectations subcomponent. This is paired with the PCE saving rate, considered by many a barometer of consumer outlook.
That said, consumers see the economy heating up after its emergence from the global health crisis, with inflation of 3.3% a year from now, pulling back in three years to 2.7%.
As seen in the graphic below, these expected growth rates are well above current Core PCE data (the Fed's preferred inflation yardstick) and the central bank's average annual 2% target.
The mood of the investor warmed up as morning trading progressed, as all three major U.S. stock indexes reversed/pared earlier losses.
Chips and transports are among overachievers, with both showing robust gains.
(Stephen Culp)
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WOBBLING ON WALL STREET (1007 EST/1507 GMT)
Major U.S. indexes are moving modestly lower early on Friday, in subdued action ahead of a three-day weekend in the United States.
Financials are leading the way among S&P 500 sectors, while real estate and consumer discretionary
are among the losers.
Data showed that U.S. consumer sentiment unexpectedly fell in early February as households remained worried about the economy.
As ever, stimulus is in focus. President Joe Biden is meeting with a bipartisan group of mayors and governors as he continues to push for approval of a $1.9 trillion coronavirus relief plan.
Ahead of a long weekend with stocks near record highs, "you’d expect to see some profit taking," JJ Kinahan, chief market strategist at TD Ameritrade, writes in a market commentary.
"While there might be some of that going on, it seems like a fear of missing out on further gains is keeping downward pressure in check," Kinahan writes.
Here is a morning snapshot:
(Lewis Krauskopf)
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S&P 500: PRESSURE IN THE PIPE (0900 EST/1400 GMT)
The S&P 500 index has seen little change over the past 3 trading days. In fact, the index is essentially flat with a gain of just 0.02% over this period.
With this narrow action shorter-term, historical volatility measures, on an hourly basis, have compressed to especially low levels:
On Tuesday, hourly Bollinger Band width collapsed to 0.00565, which was its lowest reading since December 31 of last year. On January 4, the first trading day of 2021, the SPX promptly slid 2.5%.
Bollinger Bands $(BB)$ are envelopes, or trading bands, plotted at a level of standard deviation above and below a simple moving average of price. Given that the bands are based on standard deviation, they adjust to swings in volatility.
Besides readings on December 30 and 31, over the past year or so, hourly BB width was only lower than Tuesday's level on February 14 and 18 of last year. February 18 was just 1 trading day before the SPX put in a major top.
The January 4 tumble proved to be a one-day wonder, although the aftermath of the February 2020 top was, of course, a severe month-long affair.
On the upside, low hourly BB width readings in mid-August of last year, preceded a more than 6%-thrust into the early September high.
Indeed, crushed historical volatility in itself does not predict direction, but it can indicate the market is poised for much more spirited action.
Thus, by this measure, it would appear the SPX is especially ripe to let off some steam, one way or the other.
(Terence Gabriel)
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FOR FRIDAY'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)
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