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LIVE MARKETS U.S.-Two in a row, too much to ask

Fri 20th March, 2020 8:19pm
* Early gains fade; major averages close down 3-4% * Utilities weakest major sector; energy sole gainer * Dollar down, spot gold up, NYMEX crude settles down ~11% * U.S. 10-year T-note yield ~0.87% NEW YORK, March 20 (Reuters) - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Terence Gabriel. Reach him on Messenger to share your thoughts on market moves: TWO IN A ROW, TOO MUCH TO ASK (1608 EDT/2008 GMT) Overnight gyrations carried through into the regular session on Friday, and ultimately, the major averages ended deeply in the red. Indeed, it was a struggle to hold gains throughout the session, and the S&P 500 .SPX weakened sharply into the close. With its 4.3% loss, the SPX failed to build on Thursday's modest rise and kept intact its streak, since February 12, of failing to post back-to-back up days. On a weekly basis, the SPX collapsed 15% making its worst week since an 18.2% crash in October 2008. With its decline, the SPX registered its lowest close of the current bear trend, though it has yet to take out Wednesday's 2,280.52 intraday low. Meanwhile, the Fed continued to roll out emergency measures*:nL1N2BC1R7, while President Trump says he and Senate Democratic leader Schumer are "not that far away," on relief package negotiations.*:nW1N2BC031 That said, building concerns over shutdowns in California and New York weighed on the market. And now New Jersey is saying it will "almost certainly" tighten gathering rules.*:nL1N2BD1V8 As expected with quadruple witching, volume was heavy. With the market settling, total volume across U.S. exchanges .AD.US is more than 18 billion shares. The 20-day moving average is running at about 15.5 billion. Here is your closing snapshot: (Terence Gabriel) ***** Q1 EPS estimates continue to slide (1330 EDT/1730 GMT) First quarter earnings expectations have been rapidly falling this week as analysts revise estimates to try and keep up with current economic conditions, according to Refinitiv data. On Wednesday, expectations showed a decline of 0.2% for the first quarter, the first time Refinitiv data has shown a negative view for the three-month period. Estimates then fell to a decline of 0.5% on Thursday and Friday's data shows expectations for a fall of 0.9%. At the start of the year, expectations were for earnings growth of 6.3%. Only four sectors are currently showing declines for the quarter, indicating overall S&P 500 .SPX earnings expectations are likely to continue to fall. Energy .SPNY is currently forecast to show the biggest drop at 20.6% over last year, with industrials .SPLRCI right behind with an estimated drop of 18.6%. On the plus side, communication services .SPLRCL is the only sector showing double-digit growth expectations, at 11.6%. (Chuck Mikolajczak) ***** STOCKS SEE EARLY GAINS EVAPORATE (1207 EDT/1607 GMT) A rally into a mid-morning high turned south after the New York governor ordered all non-essential businesses closed, saying everyone must stay home.*:nL1N2BD0ZC The major averages have now all turned red with the S&P 500 .SPX down more than 1%. Early strength developed as the Senate mulls a $1 trillion package that would include direct financial help for Americans. .N Additionally, the Federal Reserve expanded its money market liquidity facility to the muni market*:nN9N28J00U, and increased the frequency of swap line operations with other major central banks.*:nL1N2BD0Z2 Here is a snapshot of where markets now stand: (Terence Gabriel) ***** PAGING THROUGH A BEAR-MARKET PLAYBOOK (1124 EDT/1524 GMT) LPL Financial Research has put out a note highlighting their bear-market playbook. Indeed, LPL says it was very helpful to them in 2008–09, and they believe it can apply to the current bear market. LPL admits that such questions as, "how much further might stocks fall? Has the U.S. entered a recession?" Also, "how long will the crisis last?" are extremely difficult to answer. That said, LPL has identified signals that they believe can help determine when they would recommend that suitable investors consider adding equity exposure to their portfolios, where appropriate. In this regard LPL has identified five criteria. "The playbook for investors during this environment starts with visibility into stabilization of new coronavirus cases in the United States, which we hope comes over the next several weeks," noted LPL Financial Chief Investment Officer Burt White. Indeed, LPL is monitoring daily confidence in the timing of a peak in coronavirus cases. They believe we are almost there in terms of visibility into the probability and severity of a U.S. recession, and sufficient policy responses that restore confidence. LPL says markets have already priced in a U.S. recession and they say sentiment and technicals indicate a limited number of sellers remain. Thus, LPL believes we're getting closer to fulfilling all of these conditions, suggesting to them that an inflection point may be approaching. (Terence Gabriel) ***** INDIVIDUAL INVESTORS BEARISH, BUT LOOKING FOR BARGAINS (1042 EDT/1442 GMT) The percentage of individual investors describing their six-month outlook for the stock market as "bearish" stayed above 50% for the second consecutive week. That said, some investors are out bargain hunting. This according to the latest American Association of Individual Investors (AAII) Sentiment Survey. AAII reported that bearish sentiment, or expectations that stock prices will fall over the next six months, slipped by 0.2 percentage points to 51.1%. Pessimism is above 50% for back-to-back weeks for the first time since Feb. 19 through Mar. 5, 2009. The historical average is 30.5%. Bullish sentiment rebounded by 4.6 percentage points to 34.4%. The historical average is 38.0%. Neutral sentiment fell by 4.5 percentage points to 14.5%. Neutral sentiment was last lower on November 11, 2010. The decline keeps neutral sentiment below its historical average of 31.5% for the ninth time in 10 weeks. AAII noted pessimism continues to be at an unusually high level. Historically, AAII said that unusually low levels of bearish sentiment have had a weaker association with above-average returns for the S&P 500 index over the following six- and 12-month periods than unusually low levels of optimism. According to AAII, neutral sentiment is at its 25th lowest level in the 33-year history of their survey. However, they said they would be "cautious about drawing references from past occurrences of such low readings since 22 of the 24 lower readings all occurred during the same decade: 2000 through 2009." With these changes the bull-bear spread improved to -16.8 from -21.57 last week*:nL1N2B615K: In this week's special question, AAII asked its members how they have altered their stock investing strategy in response to the coronavirus selloff. More than a quarter of all respondents (28%) stated that they are actively looking for or buying bargains and 11% said they are looking for dividend-paying stocks. This compares to 23% of respondents who said that they are holding more cash and/or investing in commodities like gold or silver. Finally, 38% of respondents stated that they have made no changes to their investment strategy. However, many in this group did say they are considering rebalancing their portfolios earlier than initially planned. (Terence Gabriel) ***** TRYING FOR TWO (0900 EDT/1300 GMT) Markets mostly point higher ahead of the open, as stocks look to try to post two straight day's of gains. Indeed, U.S. equity index futures, foreign stocks .SSEC .STOXX , gold XAU= , and Treasuries TYcv1 are all rallying. The U.S. Dollar =USD and crude CLcv1 are pockets of weakness. That said, U.S. equity index futures have gyrated overnight, and are now well off their best levels, ibn which Nasdaq futures NQcv1 briefly hit the overnight limit up threshold. Meanwhile, the Trump team is expected on Capitol Hill today to work with lawmakers from both parties toward finalizing a $1 trillion coronavirus economic aid package.*:nL1N2BC0VB Though, California's governor has issued a sweeping statewide 'stay at home' order over the virus.*:nL1N2BD03T Some traders are noting today's quadruple-witching, or the simultaneous expiration of stock options, stock index futures and index options on the third Friday of the last month of the quarter. The feeling is that the expiries may bring some relief as a large number of short positions rolling off could ease some of the recent selling pressure.*:nL4N2BC3Y3 In any event, the S&P 500 has not managed back-to-back up days since February 12, so it remains to be seen if the premarket gains can carry into the close. However, the SPX may be ripe for something more than just a one-day relief rally, given that its weekly RSI is its most oversold since October 2008. Here is your premarket snapshot: (Terence Gabriel) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ AAII03202020B premarket032020B midday03202020 closer03202020 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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