* Major U.S. stock averages down around 1-2%
* All 11 S&P sectors in the red, energy, materials hit hardest
* Dollar gains; crude, gold slip; U.S. 10-Yr T-Note yield ~0.66%
By Chuck Mikolajczak
April 15 - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Chuck Mikolajczak. Reach him on Messenger to share your thoughts on market moves: charles.mikolajczak.thomsonreuters.com@reuters.net
PRECIOUS METAL MINING SHARES: HEADBANGING TURNS HEAVY (1256 EDT/1656 GMT)
Gold/silver mining shares didn't provide much shelter for much of the recent equity-market decline. Indeed, the Philadelphia SE Gold/Silver Index .XAU lost about 45% of its value from its February peak into its March trough.
That said, things changed after the index of precious metals miners bottomed on Mar. 16, or 5 trading days ahead of the S&P 500's .SPX March 23 trough. And as numerous stimulus measures caught the market's fancy, including the Fed's $2.3 trillion measure to backstop "Main Street," the XAU index put together what proved to be a 78% surge from its March low into Tuesday's high. This, along with a strong advance in spot gold XAU= . with those rallies, both the XAU index and spot gold banged their heads up against significant chart resistance barriers. Thus, the risk is both could now turn heavy again. (Click on chart below)
The XAU index rose to a high of 111.48 on Tuesday, putting it just shy of major resistance defined by the 38.2% Fibonacci retracement of its 2010-2016 bear market (at 112.61), and its February 2020/August 2016 highs (at 113.73/114.71).
Spot gold, after hitting $1,746.50 on Tuesday, is struggling to overwhelm the 76.4%/78.6% Fibonacci retracement zone of its 2011/2015 bear market ($1,713.93/$1,733.93).
Indeed, from Tuesday's highs, the XAU index has lost about 8% and spot gold is trading down about 2%. Unless they can reverse to the upside, and break through their resistance ceilings on a weekly closing basis, the surprise may be that both could potentially be in for protracted declines. Gabriel)
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BANKS SWOON AS PROFIT DECLINES PILE ON TO DISMAL MOOD (1145 EDT/1545 GMT)
Bank stocks sharply underperformed the broader market on Wednesday as bleak earnings reports continued to accumulate. While the biggest U.S. banks saw strong growth in trading revenue due to dramatic market swings in the quarter, profits were hacked away as they had to set aside massive reserves to prepare for a rash of loan defaults due to the halt in economic activity stemming from the coronavirus pandemic.
Also it didn't help banks that the risk off mood pushed U.S. Treasury yields lower, which would represent another drag on bank profits.
Goldman Sachs Group Inc (NYSE:GS) GS.N , up 0.1%, saw its quarterly profit nearly halved and while its trading revenue soared it booked heavy losses on its debt and equity investments. Inc C.N , down 3.7%, saw a trading revenue jump too, but it reported a 46% plunge in quarterly profit as it set aside nearly $5 billion to prepare for an expected flood of defaults on loans. of America Corp BAC.N , down 6.4%, reported a 48.5%drop in its first-quarter profit as it too but aside reserves to prepare for the fallout from what is expected to be the deepest economic down turn in generations. Chief Financial Officer Paul Donofrio said the bank's analysis showed growth would recover slowly from the second quarter but he cited "negative growth rates in GDP extending well into 2021." the S&P 500 .SPX was down 2.8% on Wednesday its bank subsector .SPXBK dropped 5.6%.
(Sinéad Carew)
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FACTORY OUTPUT, HOMEBUILDER SENTIMENT TUMBLE AS APPARENT RECESSION TAKES HOLD (1120 EDT/1520 GMT)
A data-heavy Wednesday, dominated by record plunges in retail sales and the Empire State index, also included a smattering of indicators that rounded out the picture of the extent to which massive shutdowns have hammered the U.S. economy.
Industrial production USIP=ECI fell by 5.4% and manufacturing output USFOUT=ECI suffered its biggest decline since 1946 in March, according to the U.S. Federal Reserve. drops were much worse analysts expected.
"The collapse in manufacturing output was much bigger than the 3.5% drops in September and December 2008, the worst months of the Great Recession," notes Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Capacity utilization USCAPU=ECI , a measure of how fully companies are using their resources, slid by 4.7 percentage points to 72.7%, 7.1 percentage points below the 1972-2019 average.
This month, homebuilder sentiment USNAHB=ECI saw its largest monthly drop in the history of the Housing Market index (HMI), according to the National Association of Home Builders (NAHB).
The HMI fell 42 points to a reading of 30, its lowest since June 2012 and the first time the into "pessimistic" territory in nearly six years.
"This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak," says NAHB chair Dean Mon.
Other data showed business inventories USBINV=ECI slipped 0.4% in February according to the Fed, inline with economist projections, a month before broad stay-at-home measures went into effect. sole bright spot among U.S. economic indicators was an increase in mortgage demand.
The Mortgage Bankers Association reported an increase in refi applications USMGR=ECI last week, driven by a 4 basis-point drop in the average 30-year fixed contract rate USMG=ECI to 3.45%.
Investors continued to be in a risk-off mood in late morning trading due to disappointing bank earnings and the onslaught of dire economic data.
All three major U.S. stock averages were down in a broad-based sell-off.
(Stephen Culp)
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RETAIL SALES, EMPIRE STATE SEE RECORD DROPS AS ECONOMY REELS (1000 EDT/1400 GMT)
Sweeping mandatory stay-at-home orders have hobbled the U.S. economy, and data released on Wednesday provided a glimpse at the extent of the damage.
Retail sales USRSL=ECI plunged by a record 8.7% in March, according to the U.S. Commerce Department, as business shutdowns slammed demand and took a heavy toll on consumer spending. surge in spending on online retail, groceries and a few other subcomponents was overshadowed by drastic drops in other categories.
"Overall, the data indicate a sharp net slowing in total real spending," says Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "We expect consumer spending to slow further in the second quarter, as the impact of shelter in place orders takes a toll on sentiment and spending."
Separately, the Empire State index USEMPM=ECI took a head-spinning dive in April, tumbling to a record low reading of -78.2 according to the Federal Reserve Bank of New York.
More than twice as bad as the -35 reading analysts expected, it was also the largest drop in the series' history, reflecting the sudden screeching halt in New York business activity following the state's coronavirus-driven shut-down.
"This report makes it very clear that manufacturing now is being hammered as hard as services," writes Ian Shepherdson, chief economist at Pantheon Macroeconomics. "Whether that level is undershot in April or May doesn't matter; the point is that manufacturing is in meltdown."
The wretched data, along with a smattering of lackluster bank earnings, spooked buyers away from equity markets.
All three major U.S. stock indexes were firmly in the red in morning trading.
(Stephen Culp)
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SPX: HITS A WALL, BACKS AWAY (0915 EDT/1315 GMT)
The S&P 500 index .SPX has now retraced as much as 55% of its February-March swoon. That said, with Tuesday's push, the broad-market average neared a significant resistance hurdle and stalled. (Click on chart below)
Indeed, the SPX hit a high of 2,851.85, coming just shy of the late-March low at 2,855.84. The index then slipped slightly into the close. This as the recovery off the late-March trough may be forming a bearish rising wedge. CME E-mini S&P 500 futures EScv1 suggesting a more than 60-point drop at the open, the SPX can fall back below the 50% retracement of the February-March slide at 2,792.69.
Breaking Monday's low (2,721.17) can threaten more significant support levels now in the 2,665/2,612 area. This zone includes the lower boundary of the wedge, the 200-week moving average, the 38.2% retracement of the February-March slide, the Mar. 31 high and the 50-month moving average. below these levels can suggest risk the bear trend is intensifying again with potential for new lows.
A rally that can exceed 2,855.84, however, can instead suggest the V-bottom reversal off the March low has more room to run.
(Terence Gabriel)
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FUTURES LOWER AS OIL FALLS, BANKS SKID (0846 EDT/1246 GMT)
Equity index futures were pointing to a lower open on Wednesday, as oil prices once again took a leg down and several big banks were lower in premarket trade in the wake of their earnings reports.
Brent LCOc1 was down about 4% and WTI CLc1 fell around 2% on reports of persistent oversupply and a continued evaporation of demand from lockdowns spurred by the coronavirus. to the downward pressure were declines of around 4% in Bank of America (NYSE:BAC) BAC.N , Goldman Sachs GS.N and Citigroup (NYSE:C) C.N in the wake of their earnings reports. took another leg lower after a pair of dreary economic reports, with retail sales suffering a record drop in March with an 8.7% decline while the New York Fed said its Empire State manufacturing index fell in April by the largest margin on record to the lowest level in the history of the series. is your premarket snapshot:
(Chuck Mikolajczak)
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<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Premarket levels April 15 IMAGE
https://reut.rs/2VtDAKq SPX April 15 IMAGE
https://reut.rs/2V8j82B Retail sales IMAGE
https://reut.rs/2RGWvAb Empire State IMAGE
https://reut.rs/3ccHRIS Industrial production IMAGE
https://reut.rs/2VuRThH Homebuilder sentiment IMAGE
https://reut.rs/2VtthGg XAUXAU0415 IMAGE
https://reut.rs/3emYTWw
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