LIVE MARKETS-Wall Street loses steam, burdened by tech

* S&P, Nasdaq close lower; Dow posts nominal advance

* Energy weakest major S&P sector; utilities lead gainers

* Dollar, gold up; crude, bitcoin slip

* U.S. 10-Year Treasury yield ~1.30%

July 15 - 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

WALL STREET LOSES STEAM, BURDENED BY TECH (1615 EDT/2015 GMT)

Wall Street lost altitude on Wednesday as investors digested a mixed bag of data and Fed Chairman Jerome Powell sang another verse of his "inflation is transitory" song in his second straight day of congressional testimony.

The S&P and the Nasdaq ended the session in negative territory, weighed down by market-leading tech- and tech-adjacent stocks such as Nvidia Corp , Amazon.com

, Microsoft Corp , Apple Inc , Facebook Inc and Alphabet Inc .

The Dow squeaked by, closing barely green.

Utilities advanced 1.2%, leading the gainers by a substantial margin, benefiting from falling Treasury yields and the prospect of another brutal heatwave striking the western United States.

A spate of data showed jobless claims hitting a 16-month low amid an ongoing worker shortage and factory output hamstrung by the continuing demand/supply imbalance.

Powell faced the Senate Banking Committee, where he reiterated the central bank's vows to support the economic revival and repeated his assurances that the current inflation wave is temporary.

The Fed Chair's dovish refrain helped push Treasury yields to one-week lows.

Second-quarter earnings season approaches the end of its first week, with Morgan Stanley and UnitedHealth Group

among companies having their turn at bat on Thursday.

Morgan Stanley surprised profit expectations to the upside, but a slowdown in trading left investors unimpressed. The stock eked out a 0.2% gain on the day.

UnitedHealth advanced 1.3%, providing the biggest boost to the Dow in the wake of its beat-and-raise report in which it noted a post-pandemic upswing in non-urgent care.

Here's your closing snapshot:

(Stephen Culp)

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BITCOIN AT $30,000 IS SOLID SUPPORT, BUT $25,000 BET IN OPTIONS EMERGE (1427 EDT/1627 GMT)

Pankaj Balani, chief executive officer at derivatives trading platform Delta Exchange said $30,000 remains a strong support for bitcoin in the options market, given that it's the most sold strike for July and August on the downside.

That said, Balani pointed out that below $30,000, strikes at $25,000 have emerged though with lower open interest.

"Bitcoin has been in a consolidation phase and is trying to settle in the $30,000-$40,000 range," Balani said. "Overall, the risk of downside below $30,000 on bitcoin is much higher now than what it was in the month of May and June."

Implied volatility, meanwhile, is being crushed as the market continues to trade in a tight range. Balani said if the market continues to languish, option sellers will become aggressive and continue selling the upside much more than the downside. That has been happening already, he added. He noted that implied vols are down for both the July and August expiries.

Bitcoin was last down around 4.4% at $31,396 .

(Gertrude Chavez-Dreyfuss)

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"NEGLECTED" LATAM EQUITIES' TIME TO SHINE? (1415 EDT/1815 GMT)

It has been a rough decade for Latin American equity markets, as economic woes and political unrest have unsettled investors in the region. However, the Developing Markets team at Invesco thinks it may be time for a rebound.

Indeed, MSCI's Latin America stocks index has declined nearly 40% in the last 10 years, compared with a 18% rise in the emerging market benchmark .

Invesco notes LatAm stocks now make up less than 8% of the weight of the MSCI Emerging Markets Index - less than the combined weightage of Tencent and Alibaba.

"In our view, this neglect creates conditions — though not certainties — for opportunity," Invesco's Justin Leverenz wrote in a July 14 note.

Rising commodity prices and a strong outlook for the mining sector, especially given rising demand for "green metals" like copper and cobalt, should boost Latin American stocks and currencies, potentially aided by a weaker dollar.

With this in mind, Invesco has exposure to Brazilian miner Vale and Mexico's largest copper producer Grupo Mexico < GMEXICOB.MX.>

Technology is another driver of Invesco's thesis, based on the rise of fintech, e-commerce and other tech services in countries like Brazil. The tech industry will provide job growth and investment opportunity in the region, according to Leverenz.

"Five of the new entrants in Latin America’s top market capitalization giants in the past decade have come from e-commerce and fintech, there are likely more to come as cozy oligopolies in banking and retail get shaken up around the region," he writes.

Finally, when assessing the political landscape, Invesco thinks reasonably stable central banks and political divisions should prevent a drift into "no-go zones of macroeconomic stability," while voters are unlikely to completely reject capitalism-friendly policies.

So far in 2021, MSCI's Latin America index is up 6%.

(Lisa Mattackal)

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MEANWHILE, IN WASHINGTON... (1255 EDT/1655 GMT)

Earnings season is well afoot, economic data is providing a flood of information regarding the state of the U.S. economic recovery, and investors are keeping a wary eye on the growing threat of the Delta COVID-19 variant.

But goings-on in the U.S. Capitol building remain on market participants' radar.

U.S. Federal Reserve Chairman Jerome Powell is spending his second day testifying before Congress, and the Senate Banking Committee has the latest honor.

While Powell largely stuck to his "inflation is transitory" script, he faced grilling from both sides of the aisle.

Pennsylvania Republican Pat Toomey called the central bank's ongoing purchases of mortgage-backed securities "puzzling" in view of skyrocketing home prices, while committee chair Sherrod Brown, Democrat from Ohio, challenged Powell over weakening bank regulations, saying "the Fed has rolled back important safeguards making it easier for the banks to pump up the price of their stock."

U.S. Treasury yields fell as Powell held his dovish ground.

Partisan wrangling over an infrastructure bill rolled on, with U.S. Senate Majority leader Chuck Schumer setting up the first floor debate on a $1.2 trillion package, while also urging fellow Democrats to move on a larger $3.5 trillion budget package, which includes spending on climate measures and beefs up social spending.

For his part, Senate Minority leader Mitch McConnell said in a Fox News interview on Thursday that every Republican senator would vote against the larger measure.

Industrials and materials , which stand to gain from increased infrastructure expenditures, were both green at last glance.

(Stephen Culp)

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EUROPE CLOSES IN FAMILIAR TERRITORY (1145 EDT/1545 GMT)

There are quite a lot of factors which can help explain today's 1% retreat for European stocks and the spread of the Delta variant is a big one, coupled with the ongoing bond rally and 'peak growth' fears.

The big bulk of the market price action took place within the energy sector with the index losing close to 3% and briefly hitting lows not seen since February.

Rising U.S. fuel stocks are raising concerns over the demand in the world's largest economy as you can read here:

Then again, at about 455 points, the pan-European STOXX 600 is in very familiar territory.

"It's been another negative day for European markets, as they continue to trade in the range they’ve broadly been in for the past few months", commented Michael Hewson at CMC Markets UK.

As you can see below, the STOXX 600 has spent most of the last 30 sessions hovering between 450 and 461 points.

(Julien Ponthus)

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'FIT FOR 55' PACKAGE: UNFIT FOR AIRLINES, BOOST FOR GREEN ENERGY MAJORS (1118 EDT/1518 GMT)

Just when you thought airlines stocks were recovering from the massive declines last year, the spread of the Delta variant across Europe is threatening to stall the recovery. It doesn't stop there. European Union's mega climate plan unveiled on Wednesday ain't going to sit well with investors either.

The EU Commission, in what it called the 'Fit for 55' package, said aviation must do more to contribute to its goal to cut economy-wide net emissions by 55% by 2030, from 1990 levels.

Fuel costs are the biggest headache. Bernstein analysts say easyJet faces the biggest threat due to its higher level of free allowances on jet fuel and slower fleet transition. With lower margins, Air France KLM is also badly hit. New fleet and lower allowance, on the other hand, sets up Wizz Air

favorably. But overall, they are not confident airlines can pass on higher costs to consumers.

Meanwhile, a call to stop diesel and petrol cars will have a mixed impact on auto stocks. Equita analysts point out a few names. Faurecia's clean mobility division has no products for electric cars, Sogefi's filter division is likely to see OE business fade for ICE cars. Stocks exposed to car electrification like STMicroelectronics and Umicore will benefit.

Indeed, the companies most favored by the package will be Green Energy majors including EDP Renovaveis , RWE

, EDP , Enel .

On July 14, Goldman Sachs said in a research note that it expects a fourfold growth in annual RES (Renewable Energy Sources) and a surge in power grid investments.

(Sruthi Shankar)

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THE ECONOMY CHUGS ALONG, BUT IT'S TAKING THE LOCAL, NOT THE EXPRESS (1100 EDT/1500 GMT)

A maelstrom of data unleashed on Thursday appeared to back up Federal Reserve Chairman Jerome Powell's assertion that while the economy is on a track to recovery, it's nowhere arriving at "back to normal."

A worker shortage and a steep demand/supply imbalance continue to leave their paw prints on the indicators.

The number of U.S. workers filing first-time applications for unemployment benefits last week fell by 26,000 to 360,000, hitting a 16-month low and the consensus bull's eye.

While claims have stayed below the 400,000 mark in recent weeks, they still hover above the 200,000 to 250,000 range associated with healthy labor market churn, suggesting that yanking the federal emergency unemployment supplements early (as at least 20 states led by Republican governors have done) hasn't yet prodded workers back to the labor force en masse.

About 9.5 million Americans remain unemployed, but there are also nearly that many job openings.

Still, early cancellation of federal benefits is having some effect on claims.

"The early end to emergency benefits by some states is starting to become apparent in the data," writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics (OE).

Ongoing claims, reported on a one-week delay, dipped more than expected, falling to 3.241 million.

Output by U.S. factories unexpectedly decreased by 0.1% in June, according to the Federal Reserve, marking a reversal from May's 0.9% growth, as tight chip supply weighed on automobile production.

The data reflects "a 6.6% plunge in production of autos and parts, which has bounced around wildly in recent months, presumably in response to shortages of semiconductors," notes Ian Shepherdson, chief economist at Pantheon Macroeconomics. "Growth clearly has moderated from (an) initial surge last spring, but autos aren’t the only sector struggling with tight supplies of key inputs."

In total, industrial production increased by 0.4% in June, slower than the 0.6% expected, and weaker than the 0.7% growth in May.

On the bright side, capacity utilization , a measure of economic slack, edged up 0.2 percentage points to 75.4, a hair below expectations.

This tension between strong demand and supply bottlenecks also contributed to a mixed picture Atlantic factory activity.

On the upside, manufacturing activity in New York State went to the races. The New York Fed's Empire State index zooming to a reading of 43, blowing past the 18 analysts expected.

On the other hand, the Philadelphia Federal Reserve's business index (aka Philly Fed) decelerated, dipping to 21.9, well below the level of 28 projected by economists.

"Both the Empire State and Philly Fed surveys suggest that price pressures are peaking," adds Shepherdson, "with delivery times, unfilled orders and the price indexes all slipping a bit in recent months."

An Empire State/Philly Fed reading above zero signifies expansion from the previous month.

The Labor Department also reported that the cost of imported goods rose by 1% in June, cooling down from May's 1.4% pace, but still facing upward pressure from supply bottlenecks.

Gasoline, industrial supplies and food prices drove the increase.

"While the surge in some commodity prices may be leveling off, the still-strong readings suggest elevated import price inflation will persist through 2021," says Mahir Rasheed, U.S. economist at OE. "Strong domestic demand will keep a tight pull on imports, while stubborn supply disruptions will take time to fully resolve as virus constraints linger."

Year-over-year, while import prices are up a red-hot 11.2%, the latest data marks a slight deceleration from the previous month.

The graphic below shows how import prices stack up against other major indicators relative to the Federal Reserve's average annual 2% inflation target:

Chips were not only the ghost in the U.S. factory machine, but they are also haunting Wall Street on Thursday.

While the three major U.S. stock indexes are mixed in morning-trade, the Philadelphia SE Semiconductor index is sharply underperforming.

(Stephen Culp)

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S&P 500 CAUGHT IN A TRAP? (1001 EDT/1401 GMT)

Major U.S. indexes are modestly red in early trade. That said, FANG stocks are gaining. The NYSE FANG+TM index is up, and once again flirting with its 7,329.08 February record-high close.

This follows the latest batch of quarterly corporate earnings reports, and data showing the number of Americans filing new claims for unemployment benefits fell last week as expected.

Although the S&P 500 is now on pace to end a 3-week winning streak, it is also trapped in an especially narrow range this week. In fact, the benchmark index is on track for its tightest weekly range as a percentage of the prior week's close since late December 2019. Thus, traders are on guard for a pick-up in volatility, and a breakout one way or the other. Of note, the VIX is attempting to rise for a second-straight week.

Meanwhile, Fed Chair Powell will be concluding his testimony in front of Congress today. On Wednesday, he said he was confident recent price hikes were associated with the country's post-pandemic reopening and would fade.

Here is an early-trade snapshot:

(Terence Gabriel)

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RECENT CHIP STOCK LAG MAY SOON SPLINTER NASDAQ (0910 EDT/1310 GMT)

The Philadelphia SE Semiconductor index has been a 2021 leader. In fact, this index is up nearly 18% year-to-date vs a rise of about 14% for the Nasdaq Composite .

However, after hitting its highest level in more than 15 years in early April , the SOX/IXIC ratio has struggled:

Generally, traders want to see this key sub-sector within tech outperforming to add confidence in the sustainability of the Nasdaq's rise. However, with chips now lagging, it may be a warning sign that the Composite's recent relatively smooth advance to fresh record highs, may soon splinter.

Just looking back to early 2018, multi-week/multi-month periods of SOX/IXIC ratio divergence preceded a number of significant periods of instability in the Composite.

Most recently, as the IXIC was making new highs in late April, the SOX/IXIC ratio failed to confirm the move. The Composite then declined more than 8% into its mid-May trough.

Since bottoming in mid-May, the Nasdaq has enjoyed a near-14% advance to new highs. However, the SOX is once again underperforming. In fact, the index is down in July, and on track for its biggest monthly percentage fall since March 2020.

(Terence Gabriel)

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FOR THURSDAY'S LIVE MARKETS' POSTS PRIOR TO 0905 EDT/1305 GMT - CLICK HERE:

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)