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LIVE MARKETS-Bumble generates buzz as IPO pace set to stumble

Tue 9th February, 2021 5:50pm
* S&P dips, Dow, Nasdaq up slightly * Energy weakest major S&P sector; comm services leads gainers * Dollar down; gold, crude rise * U.S. 10-Year Treasury yield ~1.15% Feb 9 - 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 BUMBLE GENERATES BUZZ AS IPO PACE SET TO STUMBLE (1245 EST/1745 GMT) Bumble Inc BMBL.O is turning heads as the online dating app looks to make its public debut on Thursday. Bumble is seeking to raise as much as $1.8 billion after the company early Monday boosted its deal size to 45 million shares and hiked its IPO marketing range to $37-$39. urn:newsml:reuters.com:*:nL4N2KE2XW Including Bumble, about a dozen aspirants were on this week's calendar, following the 14 traditional IPOs that priced last week. Companies have been rushing to get their IPOs done as major indexes hit new highs. But with 2020 September-quarter financials going stale by mid-month, the IPO pace will likely slow for a while. Here's a list of some expected IPOs this week, by targeted debut date: Feb 10: Viant Technology DSP.O (advertising tech) (~$200M) Feb 11: AFC Gamma AFCG.O (commercial mortgage REIT) (~$100M) Apria APR.O (home healthcare) (~$150M) Bioventus BVS.O (biotech) (~$130M) Bumble (online dating) (~$1.8B) Signify Health SGFY.N (in-home healthcare payments) (~$440M) Feb 12: Decibel Therapeutics DBTX.O (biotech) (~$100M) NexImmune NEXI.O (biotech) (~$80M) Talis Biomedical TLIS.O (medtech) (~$160M) (Lance Tupper) ***** EUROPE CLOSES UNINSPIRED (1155 EST/1655 GMT) It's pretty safe to assume February 9, 2021 won't be remembered as a key date in the history of European stock markets. The STOXX 600 closed down 0.1% and there just wasn't much out there to shape a trading trend throughout the session. "It has been a directionless trading session as the bullish mood that has been circulating recently has faded, hence why European equity benchmarks are mixed", wrote David Madden at CMC Markets. It seems something is needed to spice things up if the pan-European index seeks to join its global peers in breaking record highs. That's about 5% away, but there's just no catalyst in sight in the very short term. "While optimism over the impending U.S stimulus package and an impressive ramp-up in Covid vaccinations have bolstered equity prices, that rally has started to fade somewhat as traders seek further fuel for the fire", commented Joshua Mahony at IG. Some earnings action can be expected tomorrow though with notably France's Societe Generale, Deutsche Boerse, Heineken and Delivery Hero among closely watched stocks. (Julien Ponthus) ***** WHY HAVE RAIL STOCKS GROUND TO A HALT? (1126 EST/1626 GMT) The stock market's rally to start 2021 has left U.S. railroad stocks back at the station. An index of the four S&P 500 rail stocks .SPLRCRAIL has fallen about 1.5% so far this year. That performance not only lags the 4% gain for the S&P 500 .SPX but also the nearly 3% rise for the Dow Jones Transportation Index .DJT that includes the rail stocks. Bernstein analyst David Vernon has several potential reasons for why the rail stocks have stopped chugging along after a strong end to 2020. Rail stocks have been popular long holdings for hedge funds, which have been "eager to take down risk," Vernon writes in a note. The stocks are an obvious beneficiary from an economic recovery, but with that recovery now well expected, investors may be seeking to "sell the news," according to Vernon. Alternatively, investors may prefer stocks that are more levered to a cyclical rebound that are cheaper, the analyst writes. But Vernon sees a clear path ahead for the stocks from here. He has a positive view of the sector, and for U.S. rails, he has "outperform" ratings on CSX Corp CSX.O and Union Pacific Corp UNP.N . "There is more to the rail story than just a fantastic cyclical recovery in 2021," Vernon writes. "Investors can buy that coiled spring, as volume driven leverage should be fantastic, and stay for the pricing and sustainable growth story that should follow in 2022." (Lewis Krauskopf) ***** HELP WANTED: JOLTS, NFIB SHOW LABOR SHORTAGE, STIMULUS NEED (1101 EST/1601 GMT) Surging COVID-19 infection rates have had a chilling effect on the U.S. labor market and small business sentiment, suggests economic data released on Tuesday. Churn in the jobs market cooled down a bit in December, according to the Labor Department's job openings and labor turnover survey (JOLTS) USJOLT=ECI . urn:newsml:reuters.com:*:nL1N2KF1SB While the report showed increased job openings, new hires and layoffs both edged lower. This could signify a certain amount of stabilization; with open positions growing steadily and separations pulling back from November's peak. The quit rate increased from 2.2% to 2.3% of the work force. While quits are ordinarily viewed as a barometer of consumer expectations - workers are less likely to walk away from a job in times of economic uncertainty - spiking COVID-19 infections and challenges associated with remote learning likely contributed to the number. The cool-down suggested by December's JOLTS extended into January. The employment report released last Friday showed the economy added a pitiful 49,000 jobs last month, and 9.9 million jobs lost to the pandemic have yet to be regained. Rising job openings amid fewer hires reflects one of the many challenges faced by many small businesses as they weather the storm of pandemic recession. In fact, per the National Association of Independent Business (NFIB), 90% of small companies hiring or trying to hire reported few or no qualified applicants. NFIB's January optimism index USOPIN=ECI showed small business outlook deteriorated last month to its lowest level since May. The overall index ticked down 90 basis points to a reading of 95 from 95.9, driven by new round of restrictions to curb the flow of a resurgent pandemic and economic policy uncertainty. "As Congress debates another stimulus package, small employers welcome any additional relief that will provide a powerful fiscal boost as their expectations for the future are uncertain," said Bill Dunkelberg, chief economist at NFIB. "The COVID-19 pandemic continues to dictate how small businesses operate and owners are worried about future business conditions and sales." Indeed, sales and earnings expectations grew dimmer; "overall, not a positive picture," added Dunkelberg. But the employment picture brightened somewhat and expected expenditures gained ground. It should be noted that NFIB is an advocacy group that operates a political action committee (PAC) called Save America's Free Enterprise Trust. And a Democrat being sworn into office did little to boost NFIB sentiment. "The NFIB sample has a strong Republican bias," notes Ian Shepherdson, chief economist at Pantheon Macroeconomics. "So we're not surprised that the headline index has plunged since the election." Investors appeared to be taking a breather following Monday's rally. The three major U.S. stock indexes are mixed, with the S&P 500 .SPX and Dow .DJI easing off yesterday's record closing highs, while the Nasdaq .IXIC is edging up. (Stephen Culp) ***** U.S. STOCKS DIP EARLY; STREAKS AT RISK (1001 EST/1501 GMT) In the wake of several disappointing quarterly earnings reports, while investors closely track progress on passing a proposed $1.9 trillion stimulus plan, the S&P 500 .SPX is dipping in early trade. .N With the early weakness, index streaks are now at risk. The SPX has closed up six straight sessions which is its longest run of consecutive higher daily closes since a 7-day streak from August 20 to August 28 of last year. Of note, back then, the SPX topped 3 trading days later and promptly slid more than 10% into late September. In any event, 6-day win streaks in the Dow Industrials .DJI , the S&P 400 mid-cap .IDX , the S&P 600 small-cap .SPCY , the Russell 2000 .RUT , and the NYSE Composite .NYA are also at risk of ending. The Nasdaq .IXIC , however, is slightly higher, and going for a 4th straight daily gain. Meanwhile, the yield on the U.S. 3-Month Treasury Bill US3MT=RR is rising on Tuesday. Of note, despite new highs in stocks on Monday, the 3-month T-Bill closed at 0.03%, or its lowest level since March 27, 2020, which was 4 trading days after the stock market bottomed: Here is where markets stand in early trade: (Terence Gabriel) ***** YOU KNOW BITCOIN CAN FALL RIGHT? RIGHT? (0922 EST/1422 GMT) Turbocharged by the Tesla hype, bitcoin is trading around $46k a chip but it seems some investors haven't fully grasped how risky crypto is. A January online survey of 1,134 UK cryptocurrency investors conducted by findoutnow on behalf of AJ Bell shows there's some kind of misunderstanding about the risks involved. "30% of cryptocurrency investors are not willing to lose any of the money they’ve invested, which suggests they lack an appreciation of the potential downside of their investment", Laith Khalaf, an analyst at the investment platform. "Only one in four cryptocurrency investors would be willing to lose 75% or more of their investment, which is not beyond the bounds of possibility, given the volatility of the asset class", he added. Another interesting finding is that crypto buyers are not your regular mom and pop investor. 50% don't have a savings account or a pension. AJ Bell's take on the survey in a nutshell? "UK consumers seem to be playing Russian roulette with their money on the cryptocurrency markets". Here's a chart from AJ Bell's survey showing how much of their capital UK buyers are ready to lose when buying crypto: (Julien Ponthus) ***** MICRO CAPS HAVING THEIR DAY (0900 EST/1400 GMT) Small caps have certainly been garnering their fair share of attention of late. This as the small-cap iShares Russell 2000 ETF IWM.P has handily outperformed the SPDR S&P 500 ETF Trust SPY.P off the March 2020 bottom. Indeed, the IWM has rallied as much as 138% off its March trough vs a 79% advance for the SPY. That said, that gain in small caps pales in comparison to the rise in micro caps. The iShares Micro-cap ETF IWC.P has surged about 177%. This can be a double-edge sword as strong gains in the shares of companies that have a market capitalization of roughly $50 million to $300 million can suggest great confidence in the economic outlook, or it could indicate out-of-control animal spirits and rampant speculation. In any event, with the recent outperformance of micro caps vs large caps, the IWC/SPY ratio is fast approaching a 15-year resistance line: Thus, micro caps now face a big test, which could also have important implications for the overall market. A ratio failure at the resistance line could lead to the kind of multi-week divergence vs the SPY that has preceded significant market declines. Conversely, a breakout would suggest potential for greater outperformance. That said, even in that event, given that the IWC/SPY ratio is now track to rise for a 6th straight week, and 13 out of the last 14 weeks, any downtick may raise a red flag. (Terence Gabriel) ***** FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: urn:newsml:reuters.com:*:nL1N2KF1A9 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ IWCSPY02092021 https://tmsnrt.rs/3cVeH4p sdf https://tmsnrt.rs/3tBaNDX US3MT02092021 https://tmsnrt.rs/3cUltrl earlytrade02092021 https://tmsnrt.rs/3a3epXk JOLTS https://tmsnrt.rs/3jzSTNd NFIB https://tmsnrt.rs/3jFFdAo U.S. railroad stocks lag to start 2021 https://tmsnrt.rs/3a3QlE3 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Terence Gabriel and Lance Tupper are Reuters market analysts. The views expressed are their own)
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