* Nasdaq, S&P 500 edge up, Dow slips; small caps rally
* Tech leads major S&P sector gainers; healthcare weakest group
* Dollar, crude up; gold down; bitcoin ~flat
* U.S. 10-Year Treasury yield ~1.46%
June 11 - 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
S&P 500 HAS BEST EARNINGS GROWTH SINCE 2010 (1400 EDT/1800 GMT)
After much-stronger-than-expected results coming steadily throughout the first-quarter reporting period, S&P 500 companies finished off the season with their biggest quarterly percentage increase in earnings since the first quarter of 2010, just after the financial crisis, according to data from Refinitiv.
Earnings, which are rebounding from last year's pandemic-fueled lows, rose 52.7% in the first quarter from the previous year, the highest growth rate since first-quarter 2010's 58.3%, based on Refinitiv's data.
The reporting period registered some other milestones as well.
The 87.3% of reports that came in ahead of analysts' estimates for earnings per share was the highest beat rate on record going back to 1994, when Refinitiv began tracking the data.
Also, the earnings "surprise factor" of 22.3% was the second-highest on record for Refinitiv.
All eyes will soon be on second-quarter earnings, with the growth rate expected to be the highest for 2021.
(Caroline Valetkevitch)
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FED LIKELY TO KEEP FLEXIBILITY ON TAPERING AT MEETING -MORGAN STANLEY (1345 EDT/1745 GMT)
Morgan Stanley in its research note on Friday said it expects the Federal Open Market Committee $(FOMC)$ at next week's policy meeting to lay the groundwork for increased flexibility on its quantitative easing program by "talking about talking about tapering".
The bank believes the most significant changes in the June summary of economic projections would likely come in the inflation outlook and the Fed officials' median projection on the number of rate moves, more commonly referred to as the "dot plot".
"We expect especially notable near-term upward revisions to inflation projections, while we think the most likely outcome for the dot plot will show an even split among the Committee (9 vs. 9) on rate hikes in 2023."
The FOMC has made it abundantly clear though that any change in policy is conditional on the evolution of the economic data.
Morgan Stanley said in that regard, incoming U.S. economic numbers have been overcoming necessary hurdles, and keeping the FOMC on track for its balance sheet discussions.
The U.S. bank cited the non-farm payrolls for May, which came in at 559,000 new jobs, well short of the 1 million monthly estimates, as well as, the Fed's Beige Book, which reported that economic activity expanded at a somewhat faster rate than the prior reporting period.
Taken together, Morgan Stanley the data should lead the FOMC to maintain its view that "labor demand remains robust, and labor supply will soon begin to catch up to it."
(Gertrude Chavez-Dreyfuss)
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INVESTORS TAKE A SPIN AT THE MEME-STOCK CASINO (1219 EDT/1619 GMT)
As part of the most recent American Association of Individual Investors (AAII) sentiment survey , AAII polled its members for their thoughts on so-called "meme stocks", which includes such names as AMC Entertainment
, GameStop , and BlackBerry
, etc.
AAII reported that three out of 10 respondents (30%) said they felt that meme stocks were "purely speculative and dangerous." Many within this group also described investing in meme stocks as a form of "gambling."
An additional 13% of respondents maintained a cautionary outlook on the group, calling them "foolish and teaching poor investing habits." Another 11% of respondents stated that meme stocks pointed to negative market trends, indicating that these investments may lead to "a speculative bubble or overall market volatility."
Meanwhile, 23% of respondents said that they had no specific knowledge or interest in these particular stocks as they don't fit with their investing goals. About 15% of respondents had a somewhat positive to completely positive outlook on them, saying that these types of investments could be rewarding if handled correctly.
Here are a few quotes from investors on the matter:
"Gambling—pure and simple. Some will win, some will lose and not all will have a good time."
"Kind of scary actually. They are highly volatile, and I fear the volatility can transfer into regular stocks."
(Terence Gabriel)
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STOXX 600: BIT BY BIT, IT ADDS UP! (1148 EDT/1548 GMT)
The pan-European index secured its fourth weekly gain in a row and closed at a new record high at 457, up 0.7% on the day.
It's fair to say that this week's rise of 1.1% is not spectacular but added to the 0.8%, 1% and 0.4% scored each of the last three Fridays, it adds up!
Among the indexes shining is France's CAC 40 which has claimed the 6,600 bar, its highest since September 2000.
Overall, European shares are now trading at levels only a month ago many investors expected them to be towards the end of 2021.
While many analysts are probably considering revising their targets now, some of the caution across the market can probably be explained by reluctance to buy at a possible peak.
There's also some growing doubt on the reopening trade with the exponential spread of the so-called Delta variant in the UK.
Michael Hewson, a market analyst at CMC Markets noted some underperformance in the travel and leisure sector.
"Delays to reopening prompted British Airways to put some of their staff back on furlough, while the likes of Cineworld and Wagamama’s owner Restaurant Group (are) down again for the second day in succession as fears grow that next week’s announcement of a wholesale 21st June unlock becomes less likely".
(Julien Ponthus)
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EL SALVADOR COULD SPARK "CRYPTO-FRIENDLY" STAMPEDE WHILE THE U.S. LAGS (1130 EDT/1530 GMT)
El Salvador’s historic decision to make bitcoin legal tender could set off a rush of countries competing to be the most “crypto friendly” while the U.S. drags its feet on regulatory issues, according to Kevin Kelly, co-founder and head of global macro strategy at Delphi Digital.
This could increase pressure on U.S. regulators to accommodate crypto enthusiasts, he added.
“Eventually regulators will be forced to tailor the rules, otherwise they face the risk of talent flight to other more favorable countries,” Kelly told the Reuters Global Markets Forum in an interview.
El Salvador's decision has come with its fair share of criticism, including from the Bank for International Settlements' Benoit Coeure, who called it an "interesting experiment" with a "speculative asset."
Bitcoin rose following El Salvador's decision, but remains almost 42% below its all-time high hit in April.
While Kelly sees bitcoin eventually jumping back above $60,000, he sees potential for another sell-off.
"One of the big reasons for the latest sell-off was the build-up of excessive leverage, when everyone is leveraged long, it's a matter of when -- not if -- a major correction will take place... if we look back historically at similar drawdowns there's evidence we may be in for another sell-off," he said.
Meanwhile, Kelly sees cryptocurrencies gaining long-term support as investors search for alternative assets that provide more yield than bonds, particularly sovereign debt.
However, the slowdown in monetary growth could limit bitcoin's short term gains.
"If you compare bitcoin to the year on year growth in major central bank balance sheets, you'll see that bitcoin's price peaks tend to coincide with a deceleration in central bank asset growth, which is similar to what we're seeing today," he added.
(Lisa Mattackal)
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UMICH: CONSUMERS, ALONG WITH MARKETS, OBSESS OVER THE "I" WORD (1055 EDT/1455 GMT)
Market participants headed toward the weekend with modestly upbeat news about the mindset of the American consumer, who is responsible for about 70% of the U.S. economy.
The University of Michigan's preliminary take on Consumer Sentiment for June increased to a reading of 86.4, beating the 84 consensus.
While the "current conditions" component's gain came in lower than anticipated, "expectations" surpassed estimates, suggesting consumers, increasingly inoculated and flush with stimulus cash and savings, see brighter days ahead.
"The early June gain was mainly among middle and upper income households and for future economic prospects rather than current conditions," writes Richard Curtin, chief economist at UMich's Surveys of Consumers. "Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment."
With few other things to fret about and indexes floating near all-time highs, market participants have been obsessing in recent weeks over the "I" word, inflation that is.
While the demand dam is bursting as Americans economically re-engage, the supply side of the equation is struggling to meet it, resulting in the price spikes seen in recent data, notably Thursday's CPI report.
In fact, Oxford Economics' most recent recovery tracker, which follows 23 discrete economic metrics and groups them into six baskets, shows the demand component was the biggest gainer, and is now at 106.3% compared with the beginning of 2020.
But both consumers and investors increasingly appear to be buying into the Fed's assurances that these price spikes won't metastasize into long-term inflation.
The UMich report shows one-year and five-year inflation expectations ticked down this month, to 4.0% and 2.8%, respectively. Still, those numbers are above the central bank's average annual 2% inflation target.
"Rising inflation remained a top concern of consumers, although the expected rate of inflation declined in early June," Curtin adds. "Spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974."
U.S. stocks are mixed in mid-morning trading, with the major indexes slipping into the red.
Tech , small caps and transports are among the gainers.
(Stephen Culp)
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INVESTORS CROWD THE FENCE (1001 EDT/1401 GMT)
The percentage of individual investors characterizing their short-term outlook for the U.S. stock market as "neutral" approached 40% in the latest American Association of Individual Investors Sentiment Survey. With this, pessimism also bounced, while optimism fell.
AAII reported that neutral sentiment, or expectations that stock prices will be essentially flat over the next six months, increased 2.9 percentage points to 39.1%. This is the highest reading since January 1, 2020 (40.9%). Neutral sentiment is above its historical average of 31.5% for the seventh consecutive week but just the eighth time this year.
Bearish sentiment, or expectations that stock prices will decline over the next six months, edged up 0.9 percentage points to 20.7%. Bearish sentiment is below its historical average of 30.5% for the 18th consecutive week.
Bullish sentiment, or expectations that stock prices will gain over the next six months, fell 3.8 percentage points to 40.2%. Optimism remains above its historical average of 38.0% for the 25th week out of the past 30 weeks.
AAII noted that, at current levels, pessimism remains unusually low. "Historically, below-average readings for bearish sentiment have been followed by below-average six- and 12-month returns for the S&P 500 index."
With these changes, the bull-bear spread fell to +19.5 from +24.3 last week:
(Terence Gabriel)
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TECH VS BANKS: HAS THE SWITCH FLIPPED? (0900 EDT/1300 GMT)
Since tech peaked vs financials and banks in September of last year , growth has been on the back foot vs value. However, with the U.S. 10-Year Treasury yield hitting 3-month lows, tech, and growth, are enjoying a bit of a reprieve vs banks and value.
Indeed, the tech /banks ratio is currently on pace for its best weekly performance since mid-January. On a monthly basis, it is tracking its biggest rise since August of last year.
That said, tech may still have work to do on the charts to suggest a more enduring relative low vs banks is in:
The ratio is attempting to turn up well ahead of a 15-year log-scale support line, as well as the Y2K tech bubble and financial crisis peaks, which should now also act as support levels.
However, the ratio remains well below its descending 200-day moving average.
There certainly is room for a greater relative comeback, if the ratio rises to close the gap with this long-term moving average. But until the 200-DMA is reclaimed, and its downward slope at least eases, tech could ultimately still be in for more trouble, or further volatility, relative to banks.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)