* Major U.S. indexes close lower; transports hit harder
* S&P 500 ends below 50-DMA, DJI ends below 100-DMA
* Materials weakest major S&P sector; healthcare sole gainer
* Dollar up; gold, crude bitcoin dip
* U.S. 10-Year Treasury yield ~1.37%
Sept 17 - 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
U.S. STOCKS TUMBLE AS S&P 500 SUFFERS 50-DAY FUMBLE (1605 EDT/2005 GMT)
Wall Street saw an across-the-board tumble on Friday, rounding out a topsy-turvy week in which investors juggled signs of economic strength with concerns over corporate tax increases, stress from the Delta COVID variant, and possible shifts in the U.S. Federal Reserve's timeline for tapering asset purchases.
With Friday's action, the market suffered more technical damage. The S&P 500 index ended at about 4,433, which was just below its rising 50-day moving average $(DMA.AU)$ at slightly over 4,436. That was the index's first close below the 50-DMA since June 18. This closely watched intermediate-term moving average has proven to be good support in 2021 , so the break may have the potential to usher in a more significant decline.
Traders will now look to see if on Monday the benchmark index suffers a second-straight closing violation of this moving average. That's something the SPX has not done since early November of last year.
Meanwhile, for the second time this week, the Dow Jones Industrial Average , at about 34,585, ended below its 100-DMA, which is now around 34,670.
The Dow Transportation Average closed at about 14,268, or less than 0.5% above its 200-DMA, which is at 14,214. The DJT has not ended below this long-term moving average since mid-July of last year.
In any event, with this there were few bright spots on Friday. Though small caps and the healthcare sector
did post small rises.
Here is Friday's closing snapshot:
(Terence Gabriel)
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INVESTORS TRY TO SORT OUT SUPPLY SHORTAGES (1339 EDT/1739 GMT)
As part of the most recent American Association of Individual Investors (AAII) Sentiment Survey , AAII polled its members for what impact supply shortages are having on their outlook for stocks.
AAII reported that 32% of respondents said that they feel the supply shortage could have a negative impact, predicting a "decrease in sales and lackluster earnings."
That said, 31% of respondents stated that it is having little to no impact on their outlook.
Meanwhile, about 19% of respondents expressed a mixed outlook on the impact of supply shortages, implying it "could help some industries but hurt others."
Finally, 10% of respondents had positive sentiments toward supply shortages, citing "recovery." One noted that it could give companies "pricing power." About 7% of responses fell into the “other” category.
Here are a couple of quotes from investors on the matter:
“Sales are going to be limited this year and earnings per share $(EPS)$ will fall dramatically.”
“Not much. I think low interest rates and strong earnings will fuel a continued bullish outlook for stocks. I do expect a correction during this time frame with a quick reversal.”
(Terence Gabriel)
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KEEPING THE EQUITIES WEIGHT ON (1240 EDT/1640 GMT)
Despite concerns U.S. economic growth has peaked and with Federal Reserve tapering and potential tax hikes looming, Truist Advisory Services says it remains overweight equities.
"While many of the aforementioned factors are likely to lead to a continuation of a choppier market backdrop, the weight of the evidence in our work suggests the path of least resistance for the market over the next 12 months remains higher, albeit at a moderating pace," Truist Chief Market Strategist Keith Lerner said in a report on Thursday.
He noted that economic growth, which slowed over the summer amid supply constraints and a surge in COVID-19's Delta variant, "has more likely been deferred rather than lost."
"We now expect roughly 6.2% U.S. economic growth for this year and a healthy 4.5% pace next year, which would still be about double the pre-pandemic trend," Lerner said.
As for the Fed reducing its $120 billion in monthly purchases of Treasuries and mortgage-backed securities, the report pointed out the economy is in "a much stronger position relative to the last taper in 2013," during which time the S&P 500 climbed about 10%.
With the U.S. Congress considering higher corporate and capital gains tax rates, Lerner said tax policy's impact on market returns and economic growth has been inconsistent.
"Despite a tax increase in 2013, stocks rose more than 30%. Conversely, in 2018, despite tax cuts, stocks dropped about 4%," he said in the report.
Lerner added that the business cycle tends to overwhelm tax policy and the path of the coronavirus will likely have a more significant impact on the economy and markets next year.
(Karen Pierog)
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THAT'S THREE STRAIGHT WEEKS IN THE RED FOR EUROPE (1150 EDT/1550 GMT)
This afternoon's selloff continued unabated till the bell rang on European stock markets which saw the STOXX 600 end down 0.9%, and close to its lowest level for the day.
It's the third week of losses in a row and so far this month, the pan-European index is down about 2% and on course for its first monthly drop since January.
Looking at the culprits for the losses sustained today, miners and basic materials stand guilty with the sector down 3.8%, its fifth worse session of 2021.
Losses were well spread though with industrials also taking big hits while the travel and leisure space was up another 1.3%, boosted by possible relaxation of travel restrictions to the UK.
Overall, September seems to be true to its difficult reputation for stock markets.
The direction of travel for the remainder of the month is pretty much elusive.
"Although still fairly measured at present, this current selloff has the potential to be one of the most dramatic pullbacks we have seen all year, as inflation, stagflation, slowdown and virus risks all combine to knock back European and US markets", wrote Chris Beauchamp at IG.
"If the caution we have seen this week does carry over into Monday and beyond, then the next Fed meeting provides another reason to tread carefully", he added.
(Julien Ponthus)
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CONSUMERS: FUTURE LESS DIRE, BUT PURCHASES POSTPONED UNTIL INFLATION WAVE PASSES (1127 EDT/1527 GMT)
The American consumer, that economic tentpole who's responsible for about 70% of U.S. GDP, has grown just a tad less grumpy as we head into fall, even as near-term inflation expectations grow slightly hotter and the Delta monster still lurks in the closet.
The University of Michigan released its initial take on consumer sentiment for September, delivering a reading of 71, a disappointingly weak 0.7 point rebound from the prior month's plunge and a full point below consensus.
"The steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade," writes Richard Curtin, Umich's Surveys of Consumers chief economist.
An uptick in the expectations component offset a slight deterioration in current conditions, with buying attitudes for household durable goods touching the lowest level since 1980, according to Curtin.
But Ian Shepherdson, chief economist at Pantheon Macroeconomics, echoed Curtin's belief that the August nadir was a "fight or flight response" to resurgent COVID cases due to the Delta variant.
"By the time of the next survey, we expect it to be clear that Delta is in full retreat, so confidence should start to rebound," Shepherdson says.
With respect to inflation, survey participants now see near-term prices spiking to 4.7%, hotter than the previous print, before settling at 2.9% over the longer-term, unchanged from August.
The report continues to bolster the Fed's inflation line, that the current wave of price spikes associated with economic reopening are merely a passing phase.
But if they're right, and 5-year inflation hangs that far above the central bank's average annual 2% target, the interest rate hike timeline could happen sooner than analysts expect.
Heightened near-term inflation expectations also appear to be affecting consumers' purchasing plans.
"Consumers have initially reacted by viewing the rise in inflation as transitory, believing that prices will stabilize or could even fall in the future," Curtin adds. "As a result, postponing purchases is seen as a viable strategy."
The report did little to convince Wall Street not to sell off as it marches toward to conclusion of a seesaw week.
All three major U.S. stock indexes are solidly red, with chips , materials and tech redder than most.
(Stephen Culp)
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IPO MARKET OFF TO THE RACES (1101 EDT/1501 GMT)
The IPO market got off to a fast start post-Labor day and this week's batch of deals has delivered handsome returns. Nearly all 10 offerings, which raised at least $50 million, are in positive territory, sporting an average return of about 54%:
Strong deal performance leads to more deals. That said, there are 14 IPOs on next week's docket. A current near-term calendar, by anticipated debut date and approximate deal size, is below:
Sept 22:
Freshworks (software) ($900m)
Aka Brands (fashion) ($250m)
Toast (restaurant software) ($700m)
VersaBank (Canada, banking) ($50m NYSE)
Sept 23:
Argo Blockchain (UK, bitcoin mining) ($150m Nasdaq)
Brilliant Earth (jewelry) ($250m)
Knowlton Development (Canada, consumer products) ($800M dual-listed)
Remitly Global (financial software) ($480m)
Sovos Brands (branded foods) ($350m)
Sterling Check (background checks) ($300m)
Thorne Healthtech (health supplements) ($125m)
EngageSmart (software) ($350m)
Sept 24:
Clearwater Analytics (financial software) ($450m)
Cue Health (healthcare tech) ($200m)
(Lance Tupper)
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U.S. INDEXES PLAY A 50, 100, 200 GAME (1018 EDT/1418 GMT)
U.S. stocks are lower early Friday with major technology firms weighing the most, while uncertainty over higher corporate taxes and an upcoming Federal Reserve meeting may be keeping traders on the sidelines.
Meanwhile, a number of indexes continue to flirt with closely watched moving averages.
The S&P 500 , at around 4,445, is just above its rising 50-day moving average (DMA), which now resides around 4,436.
The Dow Jones Industrial Average , at around 34,600, has been churning around its sticky 100-day moving average, which is now around 34,670.
This, as the Dow Jones Transportation Average , at around 14,365, is once again nearing its rising 200-DMA, which is now around 14,200.
Traders will certainly take note if these indexes close below these moving averages in concert.
Here is where markets stand:
(Terence Gabriel)
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A WEEK FOR THE HAWKS (0952 EDT/1352 GMT)
Next week will be quite an exciting one for central banking hawks who will see the first interest rate hike from a developed country since the pandemic -- Norway is expected to raise rates to 0.25% on Thursday.
Granted, it wouldn't be a game changer for world markets but it could set the tone moving forward.
In any case, Norway may be a sideshow on Thursday which may be dominated by the question of whether the Bank of England signals when it might push the hike button.
Traders are pricing a rate rise next May but with consumer price growing at a 9-year high in August, many now believe it could come sooner. Unicredit economists for instance write today they expect "the BoE could turn hawkish on Thursday".
The other big one is the Fed's Sept. 21-22 meeting.
The timing of the Fed's tapering plans remains the key question and recent data suggests caution may be warranted: the U.S. economy created the fewest jobs in seven months in August and consumer prices increased at their slowest pace in six months.
But even if Fed chief Jerome Powell echoes the view, expressed by some of his colleagues, that stimulus tapering could start this year, he is likely to stress an interest rate rise is still way off.
Then there are the doves of the central banking world. Switzerland (Thursday) - not expected to begin shrinking its balance sheet or lifting rates until long after its peers, Sweden (Monday) -- forecast to keep rates at 0% until 2024 and the Bank of Japan (Tuesday) -- also on hold.
Some reading:
Take Five: Bring out the central bank heavies
- U.S. inflation coming off the boil as prices increase slowly in August
- BOJ to maintain stimulus as supply disruption darkens export outlook
- UK inflation posts record jump to hit 9-year peak in August
(London Markets Team with Julien Ponthus)
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BULLS RUN FOR THE HILLS (0900 EDT/1300 GMT)
The percentage of investors with a bullish short-term outlook on the U.S. stock market collapsed in the latest American Association of Individual Investors Sentiment Survey (AAII). With this, pessimism surged and neutral sentiment increased.
AAII reported that bullish sentiment, or expectations that stock prices will rise over the next six months, slid 16.4 percentage points to 22.4%. This is the lowest level of bullish sentiment since July 29, 2020. Optimism is well below the historical average low of 28%.
Bearish sentiment, or expectations that stock prices will fall over the next six months, jumped 12.1 percentage points to 39.3%. This is the seventh time out of the last nine weeks that pessimism is above the historical average of 30.5%.
Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, increased 4.4 percentage points to 38.3%. This is the second consecutive week that neutral sentiment is above the historical average of 31.5%.
AAII said that the latest bullish reading conveys "lower optimism among investors that the current bull market will continue." AAII also noted that optimism is now "unusually low," while "neutral and bearish sentiment are near the top end of their typical historical ranges."
With these changes, the bull-bear spread plunged to -16.9 from +11.7 last week :
(Terence Gabriel)
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FOR FRIDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE:
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(Terence Gabriel and Lance Tupper are Reuters market analysts. The views expressed are their own)