Main U.S. indexes fall; Nasdaq off ~2.5%; chips, FANGs weaker
Comm svcs weakest major S&P sector; staples sole gainer
Dollar, bitcoin, gold fall; crude up
U.S. 10-Year Treasury yield rises to ~1.83%
Feb 3 – 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
THE TRADING VS INVESTING BATTLE RAGES ON (1345 EST/1845 GMT)
Market plunges can be unnerving. In fact, Scott Wren, senior global market strategist at the Wells Fargo Investment Institute (WFII), says that sometimes they can force skittish investors to run for the hills, rather than see them as opportunities.
As Wren sees it, since the S&P 500 (.SPX) recently broke below its closely-watched 200-day moving average on Jan. 21, and then subsequently reclaimed on Jan. 31, it’s been a battle between traders seeking short-term profits and investors taking advantage of weakness to step in and buy equities.
Traders have their place, Wren said in a note on Wednesday, but a key piece of the puzzle on market pullbacks depends on your forward outlook, and WFII’s remains “positive.”
Looking out over the balance of 2022, WFII sees good economic growth, decelerating inflation, an improving labor market and strong corporate earnings growth. Therefore, WFII wants to “step in and be buyers when the stock market corrects.”
Given that outlook, Wren continues to recommend both tech and communication services for “quality and growth components of portfolios.”
In addition, Wren says investors can look to boost exposure to two cyclical sectors: financials and industrials. As for fixed income, Wren says favor municipal bonds and preferreds.
“In the current environment, expect more days where trader-induced volatility is met with buying coming from longer-term investors looking to take advantage of opportunities. We recommend being a buyer,” said.
(Terence Gabriel)
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SICK OF OMICRON? FRIDAY’S JOBS REPORT WILL BE TOO (1228 EST/1728 GMT)
A big spike in the number people calling in sick from the Omicron variant early last month could skew the non-farm payrolls report for January to the downside when it’s released on Friday.
Morgan Stanley is forecasting a 215,000 loss of jobs, a substantial downward revision to its previous forecast in what would be the first decline in the monthly U.S. jobs report since December 2020.
A Reuters survey shows economists expect 150,000 jobs were created in January.Strong gains in the household survey should help the Federal Reserve view January’s data as a one-off event as policymakers have said one bad month does not change the path of policy, MS said in a note.Job losses are expected to be concentrated in the Covid-sensitive sectors of leisure and hospitality; trade, transportation and utilities and disproportionately in sectors that employ a high share of hourly paid workers, MS said.Investors may have to wait for the February report early next month to better gauge labor demand and the underlying health of the jobs market, said Joe LaVorgna, chief economist for the Americas at Natixis.The survey week for January employment began a day before the Census Bureau’s Household Pulse Survey ended, LaVorgna said. The pulse survey showed more than 14 million Americans did not work from Dec. 29 to Jan. 10, he said.”Given the sheer number of people impacted, rendering a verdict on the health of January employment may be next to impossible,” LaVorgna said in a note.(Herbert Lash)*****EUROPE FALLS ON ECB’S HAWKISH ‘PIVOT’ (1157 EST/1657 GMT)Well, it was bound to happen some day!With inflation running above 5% in the euro zone, it was only a matter of time before the European Central Bank would wake up and smell the coffee like the BoE and the Fed did a while back.Nothing in particular was expected from the central bank’s meeting today, but by declining to repeat that a rate hike was unlikely this year, the ECB’s Lagarde signaled a real turning point.Euro zone money markets rushed to price an almost 100% chance of 40 bps of hikes by year-end, from a 90% chance of 30 bps hikes before Lagarde’s press conference.”President Lagarde in today’s press conference has clearly signaled a pivot from slow-moving calendar-based guidance to something far more active”, Deutsche Bank analysts commented shortly after the presser.Conclusion? “buy EUR/USD”, said the investment bank and traders sure did!The euro is currently up 1.25% against the dollar, its biggest jump since November 2020, and the yield on the Bund made its biggest jump since the market crash of March 2020.At 0.15%, the yield of the German government 10-year bond is at a level unseen since 2019 and after nearly three years in […]
source LIVE MARKETS The trading vs investing battle rages on
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