* Dow up, S&P 500 falls, Nasdaq down >1%
* Energy weakest major S&P sector; financials gain most
* Euro STOXX 600 index closes up ~0.5%
* Dollar gains; gold down, crude off ~5%
* U.S. 10-year Treasury yield ~1.73%
March 18 - 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
POST-FED, STILL DIG INTO CYCLICALS (1237 EDT/1637 GMT)
Nicholas Colas, Co-Founder of DataTrek Research, is out with some comments on Wednesday's FOMC result, and what it may mean for the market.
The upshot is that Colas thinks long-term interest rates will continue to rise. Overall, however, he is interpreting Powell’s comments and the FOMC Statement as "an implicit endorsement of our pro-cyclical stock investment perspective."
That said, he thinks there may also be a silver lining for many Big Tech stocks in that incremental consumer demand will aid Amazon.com /Apple , and perhaps Tesla
, and businesses will spend more on advertising, boosting Facebook and Alphabet/Google .
However, Colas notes that higher rates are not good for high valuation stocks that don't have the fortress balance sheets and wide competitive moats of these tech titans. Therefore, he continues to recommend caution on formerly adored speculative tech stocks which appear to have recently lost their luster.
With this, DataTrek favors large cap financials , banks , and energy . They also favor small-cap financials , and small-cap energy as high-risk plays. Additionally, they like airlines, low cost carriers especially.
(Terence Gabriel)
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JOBLESS CLAIMS, PHILLY FED: YOU TAKE THE LOW ROAD, I'LL TAKE THE HIGH ROAD (1100 EDT/1500 GMT)
Bifurcation is Thursday's secret word, with economic data implying once again that the U.S. labor market is struggling to find footing as the rest of the economy soldiers back to daylight.
The number of first-time applications for unemployment benefits submitted by U.S. workers unexpectedly rose last week to 770,000 according to the Labor Department, 70,000 above consensus.
The disappointing report was a reminder of the weight of the pandemic's burden on the labor market, which is struggling to regain its footing even as ongoing vaccine deployment and lifting restrictions are nudging the broader economy back to normal.
As Nancy Vanden Houten, lead economist at Oxford Economics (OE) points out, layoffs have been persistently higher than 665,000 - the worst week of the Great Recession - for more than a year now.
"The elevated level of claims – still higher than the Global Financial Crisis peak – underscores why the Fed will be extremely patient before making a policy change and not act pre-emptively," She writes.
Ongoing jobless claims , reported on a one-week lag, edged down to 4.124 million, 540,000 more that economists projected.
As if to punctuate the extent to which the wider economic recovery is outpacing that of the labor market, east coast manufacturing activity has shifted into overdrive this month.
The Philadelphia Federal Reserve's Business Index
- aka Philly Fed - posted an impressive reading of 51.8, surging to its highest level in nearly half a century with a whopping 27.7 point jump.
The acceleration echoes and magnifies the New York Fed's Empire State report released on Monday, which also showed manufacturing activity gaining steam.
"Looking ahead, solid goods demand, rising business investment, and generous federal pandemic relief will drive a sustained regional manufacturing expansion," says Oren Klachkin, lead U.S. economist at OE. "Our State Recovery Trackers for Pennsylvania, New Jersey, and Delaware suggest their recoveries remain on track, and regional conditions will stay solid as the broad recovery advances."
Spiking Treasury yields appear to be luring investors away from higher-risk equities in morning trading.
The Nasdaq /weak tech is dragging the overall S&P 500 into the red, while financial stocks
are helping to keep the blue-chip Dow above the water-line.
(Stephen Culp)
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U.S. STOCKS MIXED: TECH TUMBLES, FINANCIALS FINE (1009 EDT/1409 GMT)
Major U.S. indexes are mixed in early trade. The Dow is near the flat line, while the Nasdaq is sliding amid a yield spike.
The Nasdaq is off around 1.7% with the U.S. 10-Year Treasury yield , now around 1.75%, after hitting its highest level since January 2020.
With this, major S&P 500 sectors are mixed. Tech
is being hit the hardest, while financials are posting a strong rise. Overall, growth is underperforming value .
Here is where markets stand in early trade:
(Terence Gabriel)
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NASDAQ 100 FUTURES: GAMING MARCH MADNESS (0900 EDT/1300 GMT)
With the U.S. 10-Year Treasury yield jumping to its highest level since January 2020, it's perhaps no surprise that CME e-mini Nasdaq 100 futures are sharply lower in premarket trade.
Action has been a bit mad this month. Although the futures are up less than 1% in March, their average daily range as a percentage of the prior day's close has been close to 3%. That's the highest reading since last September, when the futures tumbled as much as 14.4% in just 12 trading days.
Since topping in mid-February, and based on a potential Elliott Wave count, the futures, on their up moves, have been struggling with the 61.8% Fibonacci retracement level:
Retracement rallies in mid- and later-February retraced 60.2% and 61.4% of preceding waves, ultimately leading to fresh lows.
More recently, since the March 5 trough, the futures rallied to a high of 13,285.50, retracing as much as 64.4% of the entire February/March slide, while stalling below the prior 4th wave high at 13,341.25.
With this, over the past two days the futures have been unable to close above the February/March 61.8% level at 13,241.18. Now, on Thursday, they are once again under pressure.
Thus, based on this analysis, potential remains for a more virulent decline, or a Wave 3 or C, to new lows.
A close above 13,241.18, however, could potentially help to calm the situation. That said, 13,341.25, and then additional Fibonacci barriers at 13,488.39/13,525.64, may still be hurdles against an advance to new highs.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)