Actively managed U.S. financial sector fund redemptions hit 20-year high -EPFR
Main U.S. indexes advance: Nasdaq up ~2%
All 11 S&P 500 sectors green, tech leads
Euro STOXX 600 index closes off ~0.2%
Dollar lower; gold, crude rise; bitcoin gains >4%
U.S. 10-Year Treasury yield dips to ~3.44%
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ACTIVELY MANAGED U.S. FINANCIAL SECTOR FUND REDEMPTIONS HIT 20-YEAR HIGH -EPFR (1215 EDT/1615 GMT)
With the recent banking sector turmoil, redemptions from actively managed U.S. financial sector funds were the most since 2003. This, according to research firm EPFR
EPFR says that retail redemptions from U.S. financial sector funds swelled to a 54-week high of $60 million (0.5% of assets) in the week ended March 15.
Institutional outflows continued for the third time in four weeks. Looking at actively managed U.S. financial sector funds, EPFR says their outflow of $550 million (1.6% of assets) last week was the most since 2003.
Of note, the research firm says that positioning in SVB and Credit Suisse from active managers was decreasing long before the two banking institutions began collapsing.
"Interestingly, passively managed US Financials Sector Fund inflows rose to a four-week high of $150 million (0.2% of assets), their fifth inflow in the last seven weeks," writes EPFR liquidity analyst Winston Chua.
Meanwhile, according to EPFR, institutional flows into U.S. bond funds were positive for the 11th consecutive week, though they did fall to a three-week low. Retail outflows from these funds rose to a four-week high of $1.9 billion (0.2% of assets), their 47th outflow of the last 52 weeks.
According to EPFR, from December to the end of February, demand for U.S. large cap value funds outperformed U.S. large cap growth, even though the former underperformed.
Additionally, like their larger brethren, EPFR says that U.S. small cap growth funds were more out of favor than U.S. small cap value funds.
Of note, U.S. small cap funds outperformed both U.S. mid caps and U.S. large caps in the three months ended February, with both categories having positive returns.
(Terence Gabriel)
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THE BANKING CRISIS BLESSING IN DISGUISE FOR MONETARY TIGHTENING? (1101 EDT/1501 GMT)
Ironic isn't it, that danger to the lifeline of modern economies, credit, can in anyway be a blessing, but some analysts now believe the banking rout we witnessed may have been a boon for markets battered by monetary tightening.
"Bank runs have done the Fed's job for it. The Fed acknowledged off the bat how credit conditions have tightened, which could reduce inflation. They also toned back the commitment to aggressive rate hikes," said David Russell, vice president of Market Intelligence at TradeStation.
Josh Nye, senior economist at Royal Bank of Canada also says that stress in the banking sector is likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.
A few weeks ago, market participants were pricing in a 50 basis point hike by the U.S. Federal Reserve in its March meet and a benchmark rate of nearly 6% in response to inflation bobbing up and down and a tight labor market.
But then the failure of two banks in the world's largest economy and the collapse of Credit Suisse in Europe who had been more than century in the banking business changed all that.
Traders then started betting on the Fed to hike by 25 basis points and some even expected a 'wait and see' attitude from the Fed.
All the major U.S. indexes logged their worst annual sessions since the great recession last year and entered 2023 with modest momentum on hopes of a pause by the Fed. And with all the run-downs the world has seen, it may seem markets may finally get that breakthrough.
However, to echo the Fed, markets will have to wait and see the impact of these last few weeks on the economy when the GDP figures for this month roll in.
(Johann M Cherian)
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THERE'S GOT TO BE A MORNING AFTER: POST-FED DATA (1042 EDT/1442 GMT)
A smattering of post-Fed data provided a rinse and repeat of common themes - while the labor market is tight and the housing market might have found its basement, recession worries persist.
The number of U.S. workers filling out first-time applications for unemployment benefits USJOB=ECI essentially held firm last week, dropping by a miniscule 1,000 to 191,000 and moving in the opposite direction than analysts expected and the Fed wants.
It marks the ninth week of the last ten that initial claims landed below the 200,000 level widely associated with healthy labor market churn.
The report from the Labor Department sang a song we all know by heart - the jobs market is tight, employers are disinclined to hand out pink slips amid a worker shortage which is driving wages higher and keeping inflation sticky.
It also suggests the recent spate of high-profile layoff announcements - mostly from the tech-plus sectors - have yet to have much of an effect on the unemployment line.
The report covers "both the survey week for payrolls and the first full week following the collapse of Silicon Valley Bank, et al," writes Thomas Simons, economist at Jefferies. "We had anticipated that the banking stress and extreme weather in California would result in one of the higher claims prints that we have seen for the last 6 months, but instead they were steady."
However, ongoing claims USJOBN=ECI - which are reported on a one-week lag - increased by 0.8% to 1.694 million, inching closer to pre-pandemic levels and suggesting the hint of a crack, as if it's taking workers a little longer to find new gigs.
Moving on to the housing market, sales of freshly constructed homes USHNS=ECI surprised economists by rising 1.1% last month to 640,000 units at a seasonally adjusted annualized rate (SAAR).
But while consensus called for a 3% drop, due to a downward revision to January data, the actual number landed 1.5% to the south of the expected 650,000 units SAAR.
Even so, the unexpected monthly gain is of a piece with other recent housing data, which has shown growing mortgage demand, cooling home price growth, a jump in existing home sales, rising housing starts and improving homebuilder sentiment.
Apparently, the sector isn't quite ready for demolition just yet.
"As buyers approach spring buying season, price adjustments and stabilized mortgage rates have led many buyers to commit before a potential upswing in demand," says Kelly Mangold, principal at RCLCO Real Estate Consulting.
"It will be interesting to see if the cloud of economic uncertainty most recently caused by bank failures will cause buyers to falter, or if it will dissipate as the traditional spring buyers with larger budgets come out in full force," Mangold adds.
Still, it's worth noting that while inventories of new homes on the market inched lower to 8.2 months supply, that number is well above the 5.7 pre-pandemic reading.
Finally, the Commerce Department provided a bit of ancient history regarding the fourth-quarter current account gap USCURA=ECI, which narrowed by 5.6% to $206.8 billion.
The data reflects all transactions Americans and others, covering trade in goods and services, remittances, and investments.
Recession worry-warts will find fodder in the chart below, which shows sharp contractions in the current account gap frequently accompany economic contractions:
Wall Street is bright green in late morning trading, apparently shaking off Fed Chairman Jerome Powell's insinuation that the central bank isn't done tightening.
Microsoft MSFT.O, Apple AAPL.O and Tesla TSLA.O are doing the heaviest lifting.
(Stephen Culp)
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BOUNCE ATTEMPT (1016 EDT/1416 GMT)
Major U.S. indexes are higher in the early stages of trading on Thursday as they attempt to bounce from 1.6% declines across the three major indexes on Wednesday following the Federal Reserve's 25 basis point rate hike and comments from U.S. Treasury Secretary Janet Yellen about blanket insurance for banking deposits.
Growth .RLG names are leading the charge higher, with communication services .SPLRCL and tech .SPLRCT the best performing of the 11 major sectors as U.S. bond yields eased with the Fed being seen as close to a pause on rate hikes.
Banks .SPXBK are up about 1% after dropping 3.7% on Wednesday, while the beleaguered regional banks .KRX are roughly flat following a tumble of more than 5% in the prior session.
Below is your market snapshot:
(Chuck Mikolajczak)
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J&J'S 'HOT POTATO' APPEAL REACHES SUPREME COURT (0915 EDT/ 1315 GMT)
The U.S. Supreme Court is unlikely hear Johnson & Johnson's JNJ.N appeal to resolve its LTL Management unit's bankruptcy as the former could be reluctant to clash with the U.S. Congress, Bernstein analysts say.
J&J said on Wednesday that it would appeal to the SCOTUS to review the bankruptcy of LTL Management as the pharmaceutical giant seeks to use the bankruptcy to halt more than 38,000 lawsuits alleging that company's talcum powder products were contaminated with asbestos, a carcinogenic, which J&J denies.
"The case is a hot potato that has drawn quite a bit of political attention. While we would love to see the Supreme Court force Congress's hand on tort reform, we think it's much more likely SCOTUS will kick the case back to the tort system," Bernstein analysts said in a research note.
The bankruptcy strategy stumbled in January, when the 3rd U.S. Circuit Court of Appeals based in Philadelphia ruled that LTL's bankruptcy should be dismissed because neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in "financial distress."
Given that J&J ended 2022 with $24 billion in cash on the balance sheet, a tentative payout of $11.5 billion represents less than six months of the company's free cash flow according to Bernstein's estimates.
"It will take some time for the Supreme Court decision to come, and assuming the court declines to hear JNJ's case, it will take many years for talc cases to work their way through the courts. This litigation overhang on the stock could last a long time," Bernstein said.
(Tejaswi Marthi)
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FANGS SHARP AGAIN (0900 EDT/1300 GMT)
2022 was an especially rough year for high-P/E growth stocks. However, that's all changed so far in 2023.
S&P 500 growth .IGX is back to outperforming S&P 500 value .IVX. In fact, growth has now extended its record run of gains vs value to 14-straight days.
No doubt, growth owes its outperformance to the resurgence of tech .SPLRCT, while at the same time financials .SPSY, and especially banks .SPXBK, have been battered.
Of note, however, tech titans, as defined by the NYSE FANG+ index .NYFANG, have really turned it around in 2023.
NYFANG is equal-weighted and includes the six core FAAMNG stocks: Facebook-parent Meta Platforms META.O, Apple AAPL.O, Amazon.com AMZN.O, Microsoft MSFT.O, Netflix NFLX.O and Alphabet GOOGL.O. It also includes another four actively-traded tech giants: Advanced Micro AMD.O, Nvidia NVDA.O, Snowflake SNOW.K and Tesla TSLA.O.
After suffering its only losing year ever in 2022, NYFANG is up nearly 31% so far this year. This vs a 15% year-to-date advance for the tech sector, an 11.5% Nasdaq .IXIC gain, and a 2.5% S&P 500 index .SPX rise.
NYFANG traded at an 11-month high of 6,033.50 on Wednesday before selling off and ending at 5,812.55:
Traders will want to see a weekly close above the 38.2% Fibonacci retracement of the March 2020-November 2021 advance, at 5,930, to suggest potential for a greater recovery.
The rising 10-week moving average, now around 5,485, and the 50% retracement of the March 2020-November 2021 advance, at 5,266, are now support.
(Terence Gabriel)
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FOR THURSDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
NYFANG03232023https://tmsnrt.rs/3JCrCXJ
Early trade March 23https://tmsnrt.rs/3K2BifE
Jobless claimshttps://tmsnrt.rs/3JZik9O
New home saleshttps://tmsnrt.rs/3nd805c
Current accounthttps://tmsnrt.rs/40pRw8B
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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أي محتوى تابع للغير بالإضافة إلى المحتوى الذي أعدته XM، مثل الآراء، والأخبار، والأبحاث، والتحليلات والأسعار وغيرها من المعلومات أو روابط مواقع تابعة للغير وواردة في هذا الموقع تُقدم لك "كما هي"، كتعليق عام على السوق ولا تعتبر نصيحة استثمارية. يجب ألا يُفسر أي محتوى على أنه بحث استثماري، وأن تلاحظ وتقبل أن المحتوى غير مُعدٍ وفقاً للمتطلبات القانونية المصممة لتعزيز استقلالية البحث الاستثماري، وبالتالي، فهو بمثابة تواصل تسويقي بموجب القوانين واللوائح ذات الصلة. فضلاً تأكد من أنك قد قرأت وفهمت الإخطار بالبحوث الاستثمارية غير المستقلة والتحذير من مخاطر المعلومات السابقة، والذي يمكنك الاطلاع عليه هنا.
