* S&P 500 slips, Nasdaq off ~1%; DJI on pace for 3rd straight record close
* Real estate weakest major S&P sector; energy leads gainers
* Euro STOXX 600 index ~flat
* Dollar down; bitcoin, gold, crude rise
* U.S. 10-Year Treasury yield edges up to ~1.66%
Jan 5 - 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
NEXT STOP, PAYROLLS: WEDNESDAY INDICATORS POINT TO RECOVERY HOMECOMING (1051 EST/1551 GMT)
Data released on Wednesday provided upbeat news that the U.S. economy express could pull into Normaltown ahead of schedule.
A surge in hiring, continued (though abating) expansion in the services sector, and a housing market returning to earth all point to a welcome return to pre-COVID equanimity.
First, private U.S. employers added a whopping 807,000 jobs last month, according to ADP.
The payrolls processor's National Employment index
overshot the 400,000 consensus by a mile and came in 121% above the level analysts expect the Labor Department's more comprehensive employment report to show on Friday.
If ADP is a prologue to that jobs report, it implies an uptick in labor market participation and a sizeable step back toward the 'full employment' goal set by the Federal Reserve as a precondition for tightening its pandemic-era monetary policy.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, writes that the ADP print points to a "fading of some of the forces holding back labor supply - enhanced/extended unemployment benefits, and school/childcare closures - combined with strong labor demand, triggered rising participation late last year, facilitating a surge in payrolls."
"This could be interrupted in the January numbers by the Omicron Covid wave," he warns.
Next, the services sector, while showing some loss of momentum, notched its 17th-consecutive month of expanded activity in December.
Global financial information firm IHS Markit's final reading of its services PMI (purchasing managers index) came in at 57.6, marking a slight deceleration from November's even 58 print.
A PMI reading over 50 indicates a monthly increase in activity.
While customer-facing services suffered the brunt of initial social distancing mandates to contain the pandemic, they have since rebounded in response to booming demand, even as the health crisis continues to drone on.
"Although the expansion in output softened slightly, the flow of new orders picked up, with buoyant client demand rising at the fastest pace for five months," says Sian Jones, senior economist at IHS Markit.
Be that as it may, while supply chains are showing signs of untangling, and the tight labor market appears to be loosening, input prices and hot wage inflation remain headwinds.
"Subsequently, soaring wage bills and increased transportation fees drove the rate of cost inflation up to a fresh series high," Jones adds.
The Institute for Supply Management $(ISM)$ is due to release its services PMI number on Thursday, and it is expected to come in at 66.9, a 2.2-point deceleration from November.
Finally, demand for home loans slipped by 5.6% to a near two-year low in the closing days of 2021 as interest rates resumed their uphill climb.
The Mortgage Bankers Association's (MBA) weekly report showed the average 30-year fixed contract rate adding a mere 2 basis points to 3.33%, but this was enough to prompt a 10.2% drop in applications to purchase homes and a 2.5% decline in refi demand .
While "the data point to a loss of momentum in purchase applications and home sales," writes Nancy Vanden Houten, lead economist at Oxford Economics, she also notes the data is often volatile around the holidays.
Still, the housing market faces challenges in the coming year.
"We expect existing home sales to lose some steam and then trend sideways over the course of 2022 as the market navigates headwinds in the form of limited supply and declining affordability and tailwinds from resilient demand," Houten adds.
All told, mortgage demand is down more than 30% from a year ago, when the pandemic-driven stampede for the suburbs hit its zenith, sending housing inventories to record lows and launching home prices to the moon.
Wall Street is serving a mixed platter of hot and cold in morning trading.
The S&P 500 and the Nasdaq are once again being dragged into the red by tech , while industrials
and financials help set the Dow on a course for its third consecutive record closing high.
(Stephen Culp)
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U.S. STOCKS MIXED, BUT VALUE-TILT PERSISTS (0959 EST/1459 GMT)
Wall Street's main indexes are mixed early Wednesday ahead of minutes from the Federal Reserve's December meeting, as a rise in U.S. Treasury yields continues to hit technology-heavy growth stocks.
The Dow Jones Industrial Average and S&P 500 are near flat, while the Nasdaq Composite is more forthrightly red.
This, as the U.S. 10-Year Treasury yield edges up to the 1.66% area, and the tilt toward value persists. The S&P 500 value /S&P 500 growth ratio is on track for its biggest weekly rise since early May.
That said, the S&P 500 Banks index is now slightly negative, and chips are well off their early lows. The NYSE FANG+ index has ticked green.
Here is where markets stand about 30 minutes into the trading day:
(Terence Gabriel)
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2022 NASDAQ COMPOSITE: YEAR OF THE ROADRUNNER OR THE COYOTE? (0900 EST/1400 GMT)
The Nasdaq Composite accomplished a rare feat last year. That is, its entire 2021 trading range was above its upper yearly Bollinger Band $(BB)$:
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. The bands can help answer the question of whether price is high or low on a relative basis.
Using Refinitiv data, the IXIC has ended a year above its upper yearly BB - or more than two standard deviations above its 20-year moving average - ten times, or about 43% of the time. This includes a current nine-year streak from 2013 to 2021.
However, besides the building streak, what was especially unique about last year is that the Composite's 12,397.05 low was above its upper yearly BB, which ended the year at 12,274.516. This is the first time the IXIC has managed this in 23 years of data, which makes it just over 4% of the time.
When looking at the greater histories of the Dow (107 years of data), and S&P 500 (75 years of data), these indexes' entire yearly ranges have only been above their upper yearly BB once (0.9% of the time), and twice (2.7% of the time), making it a rare event.
The Composite may yet accomplish this feat again in 2022, but neither the Dow or SPX has ever managed do it two-straight years.
It is just the start of 2022, and the market's exact path is highly uncertain. However, given that the IXIC's upper yearly BB currently resides at 14,173, or nearly 10% below Tuesday's close, and that it will adjust for volatility, potential exists for some especially wild action throughout this year, whether it be a big upside run, a cliff dive, or both.
(Terence Gabriel)
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FOR WEDNESDAY'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)