LIVE MARKETS-Flying FANGs give Nasdaq an early lift
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FLYING FANGS GIVE NASDAQ AN EARLY LIFT (1005 EDT/1405 GMT)
The Nasdaq hit a record high out of the gate on Wednesday as weaker-than-expected private payroll data fueled hopes for extended support from the U.S. central bank. .N
The NYSE FANG+TM Index .NYFANG, which finally closed at a new high on Tuesday, above its prior peak set on February 16 of this year, is outperforming with a gain of more than 1%. NYFANG is now on pace to rally nearly 9%, in just 9 trading days.
Utilities .SPLRCU and real estate .SPLRCR are the best performing major S&P 500 sectors, while more economically sensitive groups are on the weak side. The Dow Transports .DJT and small-cap Russell 2000 .RUT are also red on the day.
Growth .IGX is outperforming value .IVX. In fact, the IGX/IVX ratio is now nearing its all-time high set in September 2020.
Meanwhile, July construction spending and August ISM Manufacturing PMI both came in above estimates. ISM prices paid pulled back to their lowest in eight months.
Here is where markets stand in early trade:
BENCHMARK 10-YEAR TREASURY YIELDS EN ROUTE FOR 1.90% IN THE COMING MONTHS - JPM (0940 EDT/1340 GMT)
The U.S. benchmark 10-year Treasury yield is likely to rise to 1.90% in the coming months after potentially forming a reversal pattern, but first it needs to break above the key 1.40% level, according to analysts at JPMorgan.
The yield has bounced from a possible double bottom of 1.128% on July 20 and 1.127% on August 4, levels that the bank said were overbought in Treasuries. Now that this trend has decelerated JPMorgan is “looking for an eventual release to higher yields.”
The 1.40% area, which is close to the top end of the T-Note's recent trading range, needs to be broken in order to take yields higher still, analysts including Jay Barry and Jason Hunter said in a report sent late on Tuesday.
“We believe a move through the 1.40% inflection is required to create a bearish medium-term momentum dynamic, in which selling pressure has an increased chance of creating more selling pressure,” they said.
The 10-year yield US10YT=RR is around 1.29% on Wednesday.
Several trend-following signal thresholds also sit between 1.45% and 1.60% and a break through support in the mid-1.40% area would “open the door for a rapid trend to retest” the 1.79% level, JPMorgan said.
Longer-term support for the 10-year Treasury then resides in the 1.90% area, “levels we believe the market to attain in the months ahead,” they said.
IS TIME FOR A SEPTEMBER MOURN? (0900 EDT/1300 GMT)
The S&P 500 .SPX rose for a 7th straight month in August, which is its longest such streak since a 10-month run of gains ending in January 2018. The benchmark index advanced 2.9% last month and is now up 20.4% year-to-date, which has it on track for its biggest yearly rise since a 28.9% advance in 2019.
That said, the S&P 500 is about to enter its worst month of the year.
Using Refinitiv data back to 1928, September has been the worst month, on average, for the S&P 500. It's average change is a decline of 1%:
Of note, through Tuesday, it has now been 342 calendar days since the SPX last ended a decline of more than 5% on a closing basis.
Interestingly enough, that decline developed in the wake of the S&P 500's September 2, 2020 high, from which it slid 9.6% into its September 23, 2020 low.
Additionally, from 1928 to 2020, there were 31 Augusts with a gain of more than 2%. However, in those instances, the S&P 500's average change for the rest of the year was a gain of only about 0.5%.
Therefore, whether this September lives up to its reputation or not, the broad-market average may face a struggle from now to the end of the year. nL1N2Q20R6
FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE: nL8N2Q33CJ
10-year note yieldshttps://tmsnrt.rs/3Bvoffz
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)