Markets mixed, “choppy conditions will persist”

Markets were mixed on Wednesday.

Early in the day, Asian stocks fell, with the Nikkei 225 plunging 2.1 percent.

However, the S&P 500 rose 0.2 percent and the STOXX Europe 600 rose 0.6 percent.

Lori Calvasina from RBC Capital Markets said “we think choppy conditions in U.S. equities will persist a while longer”.

Indeed, Federal Reserve Chair Jerome Powell said at a European Central Bank event on Wednesday that bottlenecks and supply chain problems are “holding up inflation longer than we had thought”.

Stocks plunge as US Treasury yields rise

Markets fell on Tuesday.

The S&P 500 plunged 2.0 percent, the STOXX Europe 600 sank 2.2 percent and the Nikkei 225 fell 0.2 percent.

The US 10-year Treasury yield rose, hitting 1.567 percent.

“The market’s been steadily coming around to the reality that yields were awfully low relative to the fundamentals,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.

Some analysts think stocks could slide further.

CFRA chief investment strategist Sam Stovall said “with tech being down 2.5% with interest rates higher, I would think there is still more downside potential”.

Markets mixed, Evergrande surges

Markets were mixed on Monday.

The S&P 500 fell 0.3 percent as Treasury yields rose

In Europe, a 1.1 percent fall in the SMI dragged the STOXX Europe 600 down 0.2 percent even as most other major European markets closed higher.

In Asia, the Shanghai Composite fell 0.8 percent even as Evergrande shares in Hong Kong surged 8 percent while the Nikkei 225 was flat.

Markets mixed, Evergrande falls again

Markets were mixed on Friday.

The S&P 500 rose 0.1 percent but the STOXX Europe 600 fell 0.9 percent.

Earlier in Asia, the Nikkei 225 surged 2.1 percent but the Shanghai Composite fell 0.8 percent.

Shares of China Evergrande Group in Hong Kong fell 11.6 percent after Chinese authorities reportedly told local officials to prepare for a potential demise of the company.

The mixed performance of markets reflected investor sentiment, with Ryan Detrick, chief market strategist for LPL Financial, saying that “many of the worries over Evergrande, a slowing economy, and continued supply chain issues are still out there”.

Markets rise, Evergrande jumps

Markets rose on Thursday.

The S&P 500 rose 1.2 percent, the STOXX Europe 600 rose 0.9 percent and the Shanghai Composite rose 0.4 percent.

Shares of China Evergrande Group jumped 17.6 percent after it resolved payment on a local bond.

The S&P 500 posted a second consecutive day of gains after the Federal Reserve on Wednesday indicated no immediate removal of stimulus policies.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said that “we are constructive on the U.S. economy in general and believe that any dips would be worth buying as the fundamentals are still sound and recession appears to be more than a year away at this point”.

Markets mixed as US rebound fails

Markets were mixed on Tuesday.

While the STOXX Europe 600 rose 1.0 percent, an attempt at a rebound failed in the US, with the S&P 500 ending 0.1 percent lower.

The Evergrande crisis continued to weigh on investors' minds.

Ed Yardeni of Yardeni Research said that the Chinese government will not let the firm fail and will intervene to restructure it. “When they do, stock markets around the world should enjoy relief rallies,” he said.

In the meantime, though, Canaccord Genuity Chief Market Strategist Tony Dwyer said that “we would expect a bit more indigestion and begin adding risk back into the market on any further weakness as the bottoming process begins”.

Markets fall, Evergrande crisis poses a “contagion issue”

Markets fell sharply on Monday.

Following falls in Asia, where the Hang Seng sank 3.3 percent, the S&P 500 and STOXX Europe 600 both fell 1.7 percent.

Investment sentiment was shaken by fears surrounding property developer China Evergrande Group.

“It has $300 billion in outstanding debt,” said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. “There is a contagion issue if China Evergrande is not resolved.”

Hong Kong stock market plunges amid Evergrande woes

Hong Kong's Hang Seng Index plunged 3.3 percent on Monday, leading losses in Asian trading.

Shares of China Evergrande Group dived 10.24 percent, after falling as much as 17 percent earlier.

Property giant Evergrande is on the brink of collapse, with a debt load of more than US$300 billion.

“Evergrande’s collapse would be the biggest test that China’s financial system has faced in years,” says Mark Williams, chief Asia economist at Capital Economics.

Elsewhere in the region, the S&P/ASX 200 in Australia fell 2.1 percent while the Chinese and Japanese markets were closed.

Markets mixed, “finely poised for very big move”

Markets were mixed on Friday.

The S&P 500 and STOXX Europe 600 fell 0.9 percent.

However, earlier in Asia, markets were higher, with the Nikkei 225 up 0.6 percent and the Shanghai Composite up 0.2 percent.

Some analysts have noted that the US stock market is undergoing a slow motion deterioration.

“For the last several months, most stocks have declined more frequently than they have advanced--evidence of a weakening market condition,” CFRA chief investment strategist Sam Stovall said in a recent note to clients.

Paul Gambles, co-founder of investment advisory firm MBMG Group, said that “the market is very finely poised waiting for what potentially could be a very, very big move” and “unless you can really afford to take what could be a pretty big hit, and possibly even a permanent hit, then it is better to just sit on the sidelines”.

Markets mixed, US retail sales post surprise gain

Markets were mixed on Thursday.

The S&P 500 fell 0.2 percent and the Nikkei 225 fell 0.6 percent.

However, the STOXX Europe 600 rose 0.4 percent.

The fall in US stocks was cushioned by a surprise 0.7 percent rise in retail sales in August.

Markets mixed, Chinese retail sales disappoint

Markets were mixed on Wednesday.

The S&P 500 rose 0.8 percent but the STOXX Europe 500 fell 0.8 percent and the Nikkei 225 fell 0.5 percent.

“We remain positive on the equity outlook, and expect S&P 500 to reach 4,700 by end of this year and surpass 5,000 next year on better than expected earnings,” JPMorgan strategist Dubravko Lakos-Bujas wrote in a note on Wednesday.

However, China's economy suffered a setback in August.

Retail sales rose 2.5 percent last month from a year ago, well below the 7 percent growth forecast by analysts polled by Reuters. Industrial production rose 5.3 percent, also below expectations.

Markets mixed, US inflation lower than expected

Markets were mixed on Tuesday.

The S&P 500 fell 0.6 percent while the STOXX Europe 600 was flat.

Earlier in Asia, the Shanghai Composite fell 1.4 percent but the Nikkei 225 rose 0.7 percent.

A report showing that US consumer prices posted a smaller-than-expected 5.3 percent increase in August from a year ago failed to lift stocks.

“What we need to see to be fundamentally markets supportive is a continued easing in the inflation piece without deterioration in the economic outlook,” said Liz Ann Sonders, Charles Schwab chief investment strategist.

S&P 500 rises as COVID-19 cases fall

The S&P 500 rose 0.2 percent on Monday, its first rise in six days.

US stocks rose as COVID-19 case counts in the country showed signs of easing.

Based on data compiled by Johns Hopkins University, the seven-day average of daily COVID-19 cases was 144,300 on 12 September. That is down 12 percent over the past week and 14 percent from the most-recent peak in case counts on 1 September.

Dr Arturo Casadevall, chair of molecular microbiology and immunology at the Johns Hopkins Bloomberg School of Public Health, said that this could mean that “we have reached a peak and we are now on the way down”.

That is encouraging to investment analysts.

“We retain a pro-risk allocation on strong global growth as the world continues to recover from the pandemic, accommodative policy, and continuing earnings surprises,” JPMorgan’s Marko Kolanovic said in a note Monday.

Still, inflation remains a concern.

“Supply bottlenecks, inventory shortages, higher commodity prices, and higher shipping rates have all contributed to higher input costs,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

US may be seeing peak in both COVID-19 and economic growth

In his latest commentary, John Hussman, president of Hussman Investment Trust, stated that he has a defensive outlook for the stock market.

“Amid the most extreme valuations in history, we’ve observed gradual deterioration in our measures of internals in recent months, with breakdowns among individual stocks in the broad market accelerating in recent weeks,” he said.

Hussman is relatively optimistic on the COVID-19 front, saying that “we’ve reached the peak of the Delta wave” and expects that the “pandemic will rapidly subside in the weeks ahead”.

However, on the economic front, Hussman thinks a reduction in Federal deficit spending will offset the expected increase in private economic activity.

“It’s not at all clear that gross economic activity will increase,” he said.

Similarly, Amanda Agati, chief investment officer at PNC Financial Services Group, told CNBC on Friday that the signs point to “peak growth” right now.

This could set the stock market up for a correction.

“It’s just trying to be really realistic about how far and how fast the market has rallied and how extended valuations really are across the board, leaving fairly little headroom in the short run here for the market to keep forging this path higher,” she said.

Markets fall, central banks expected “to remain supportive of growth”

Markets were mostly lower on Friday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 0.3 percent. However, the Nikkei 225 jumped 1.2 percent.

A report on Friday showed that US producer prices jumped 8.3 percent in August from a year ago.

“Investors are wringing their hands over growth but are seeing higher inflation at the same time,” noted Jack Ablin, Cresset Capital Management’s founding partner and CIO.

Still, Mark Haefele, UBS Global Wealth Management chief investment officer, said: “We expect major central banks to remain supportive of growth, keeping rates lower for longer. This is positive for equity markets, particularly cyclical and value areas of the market.”

In Europe, HSBC economists Simon Wells and Fabio Balboni suggested that “the relatively dovish upward revision to the inflation forecast should reassure markets that more support is coming” from the European Central Bank.

“Ultimately, we see stocks finishing September strongly,” wrote Fundstrat’s Tom Lee in a note.

Markets fall, ECB to slow asset purchases

Markets were mostly lower on Thursday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 dipped 0.1 percent and the Nikkei 225 fell 0.6 percent.

The European Central Bank left its key interest rate unchanged at zero at its monetary policy meeting on Thursday but announced that it will slow the pace of its emergency asset purchases.

“Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the (PEPP) than in the previous two quarters,” the ECB said in a statement.

S&P 500 to reach “new high by year end”

Markets were mostly lower on Wednesday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 1.1 percent. However, the Nikkei 225 rose 0.9 percent.

Inflation concerns were renewed on Wednesday after the Federal Reserve's Beige Book report showed that businesses are experiencing rising inflation even as growth moderated.

“Equities are likely to have a pullback at some point, likely driven by another reset in real yields higher, but other tailwinds should drive the S&P 500 to a new high by year end,” UBS told clients on Wednesday.

Indeed, Mark Zandi, chief economist of Moody's Analytics, wrote in a CNN article that while the Delta variant of COVID-19 “weighs on the economic recovery, odds remain good that it won't short-circuit it”.

Markets mixed, US faces “outsized risk”

Markets were mixed on Tuesday.

The S&P 500 fell 0.3 percent and the STOXX Europe 600 fell 0.5 percent.

However, Asian markets rose, with the Shanghai Composite up 1.5 percent and the Nikkei 225 up 0.9 percent.

Over the weekend, Goldman Sachs cut its US fourth-quarter annualised GDP growth rate to 5.5 percent, down from 6.5 percent, saying that “fading fiscal stimulus and a slower service sector recovery will both be headwinds in the medium term”.

On Tuesday, Morgan Stanley downgraded US equities to underweight, saying that “the next two months carry an outsized risk to growth, policy and the legislative agenda”.

There was more positive news though from Asia, where a report on Tuesday showed that China’s exports jumped 25.6 percent year-over-year in August, above expectations for a 17.1 percent rise.

Markets rise, Fed expected to delay taper

Markets rose on Monday.

The STOXX Europe 600 rose 0.7 percent and the Nikkei 225 jumped 1.8 percent. The US stock market was closed for a holiday.

Investors appear unfazed by the lower-than-expected number of job gains in the US August employment report on Friday.

“In our view, the setback in the recovery in the labour market and the jump in serious covid infections will encourage the FOMC to wait before it announces it will taper its monthly asset purchases. We now expect the FOMC to announce an $US10bn taper of its monthly asset purchases at its 3 November meeting,” analysts at Commonwealth Bank of Australia wrote in a Monday note.

Indeed, Fundstrat Global Advisors’ co-founder and head of research Tom Lee told CNBC on Friday: “We could have a really strong rally in September.”

However, Lee also warned of a potential 10 percent correction in October.

S&P 500 near record high amid “huge amount of froth”

The S&P 500 rose 0.6 percent last week, ending just off a record high.

However, some analysts are warning that the strong run in equities may be close to an end.

“There’s a huge amount of froth in the marketplace right now much like we’ve seen in other important tops of the market that only became obvious in hindsight,” Miller Tabak chief market strategist Matt Maley said on CNBC last Thursday.

Maley cited red flags like “the meme stocks which are flying ... SPACs that are going crazy here ... a stock market that’s very, very expensive, and a market that is overbought”.

Gina Sanchez, chief market strategist at Lido Advisors and CEO of Chantico Global, suggested that investors look out for catalysts that could prompt a downturn.

“The first catalyst I see is just the fact that we have priced in very strong expectations,” Sanchez said. The strong expectations leave room for disappointment.

“The second and more important catalyst I’m looking for is when the liquidity starts to get dialed in and stepped out of the market. When that happens, I think that’s when you could have a real potential correction,” said Sanchez.

US employment disappoints, inflation could repeat the 1960s

Markets were mixed on Friday.

The S&P 500 finished flat after a report showed that US nonfarm payrolls rose 235,000 in August, well below economists' expectations for a gain of 720,000.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said that based on this report, an announcement by the Federal Reserve of plans to taper bond purchases at this month’s FOMC meeting “is no longer likely”.

However, Goldman Sachs chief economist Jan Hatzius said that “the situation is improving somewhat” and expects “better numbers in coming months”.

Meanwhile, inflation remains a concern and there is a risk that inflation could be repeating the trajectory of the late 1960s.

“My sense is that we are not heading for the 1970s but we could be rerunning the late 1960s, when famously the Fed chair then, McChesney Martin, lost control of inflation expectations,” said economic historian Niall Ferguson.

At record high, S&P 500 rally “to extend further”

Markets were mostly higher on Thursday, with the S&P 500 rising 0.3 percent to another record high.

In the US, a report showed that first-time claims for unemployment insurance totaled 340,000 for the week ended 28 August, the lowest since March 2020.

Mike Loewengart, managing director of investment strategy at E-Trade, said that “on one hand a solid jobs report is a positive indication of economic recovery, and on the other it backs up the Fed’s case to begin tapering”.

Credit Suisse said: “The relentless march higher on low volatility in U.S. equities continues and with breadth, volume positioning and sentiment measures all positive in our view we look for the rally to extend further into new highs yet.”

Chinese manufacturing contracts, US private jobs disappoint

Markets were mostly higher on Wednesday.

While the S&P 500 closed marginally higher, the STOXX Europe 600 rose 0.5 percent and the Shanghai Composite rose 0.7 percent.

Chinese market gains were possibly weighed down by news on Wednesday that the Caixin/Markit manufacturing PMI for August came in at 49.2, suggesting a contraction in manufacturing activity.

US stocks were also possibly weighed down by a report from ADP that private payrolls rose by a less-than-expected 374,000.

Still, Mike Loewengart, managing director of investment strategy at E-Trade, said that the number “means easy money policy continues”.

“This bull market is alive and well and we would view any potential weakness as an opportunity,” said LPL Financial chief market strategist Ryan Detrick.

Recovery is “intact” but stocks still face “myriad of risks”

The S&P 500 slipped 0.1 percent on Tuesday.

However, many analysts remain optimistic on the prospects for stocks.

“We believe that the momentum toward reopening and recovery is intact and that there is further upside to equities,” wrote Mark Haefele, chief investment officer of global wealth management at UBS, in a note.

Wells Fargo strategists wrote in a note that “strong economic and earnings growth and relatively low rates through 2022 should support higher equity prices and sustain the bull market”.

Still, other analysts noted mounting risks for stocks.

Charles Schwab chief investment strategist Liz Ann Sonders said: “Are there a myriad of risks out there that at some point in time could be a risk factor that could lead to more than a 3% or 4% pullback? Absolutely.”

Sonders said that “sadly, the market is still at the mercy” of COVID-19.

BITG head of equity and derivatives strategy Julian Emanuel said that consumer confidence “has already rolled over” and suggested that investors “be prudent”.