* U.S. equity indexes gain ground; small caps outperform
* Financials lead S&P sector gainers; materials is sole loser
* Euro STOXX 600 Index closes up 0.6%
* Dollar, crude up, gold tumbles
* U.S. 10-Year Treasury yield ~1.14%
Feb 4 - 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
BANKS LIFT EUROPE TO 4TH STRAIGHT SESSION OF GAINS (1237 EST/1737 GMT)
The pan-European STOXX 600 index has signed off a fourth straight session of gains with a 0.6% rise, setting it on course for weekly gains of 3.4%.
If that still holds on Friday evening, it would be its best week since November.
U.S. stimulus optimism played its part but there was plenty of good news propping up European banks with their index jumping about 2.6%.
Notably, the BoE saying British lenders would need at least six months to prepare for negative rates was a clear boost to the sector which rose 2.8%. Natwest NWG.L and Lloyds LLOY.L rose well over 5%.
In Italy, banking stocks were also on the rise and enjoying watching former ECB head Draghi attempting to build a coalition.
Also on the bright side, Deutsche Bank DBKGn.DE eked out a small profit in 2020 after five years of losses.
While it didn't do much good to the German giant's shares, which closed down 0.3%, there was a positive read across for the sector.
The best performing banking stock was BBVA (MC:BBVA), up 7.5% and seemingly still very popular after announcing last week a share buyback plan and its intention to resume paying dividends.
Among losers, Unilever ULVR.L stood out with a 6.2% fall after it underwhelmed investors with disappointing sales targets.
Another underperformer of the earnings season was ABB, down 5%. The Swiss group was also criticised for its outlook announced after a surprise Q4 loss.
(Julien Ponthus)
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UFO: IN ORBIT ON THE CHARTS (1137 EST/1637 GMT)
Space-related stocks have been on a rocket ride of late. Indeed, the Procure Space ETF UFO.O has outperformed so far in 2021 with a more than 16% thrust vs the S&P 500's .SPX rise of only around 2.5%.
Indeed, there appears to be growing enthusiasm for "final frontier" stocks. This, despite the recent news that a prototype of a Starship rocket developed by SpaceX, billionaire entrepreneur Elon Musk's private space company, exploded during a landing attempt minutes after a high-altitude experimental launch on Tuesday, in a repeat of an accident that destroyed a previous test rocket. any event, this did not deflect enthusiasm for UFO, which has hit fresh record highs Thursday:
This week, the ETF broke above its $29.03 February 2020 top, and has extended as high as $29.77. There is a channel resistance line, however, around $29.70, which may hinder strength. The resistance line across highs from mid-2019 now comes in around $31.65, or nearly 7% above current levels.
As of January 31, UFO's top holdings included Iridium Technologies IRDM.O , Virgin Galactic SPCE.N , and Gilat Satellite GILT.TA .
Virgin Galactic has been especially strong this year, with a gain of more than 130%. In fact, SPCE shares have more than doubled since ARK Investment Management filed on January 13 for a space exploration ETF. said, after spiking to a fresh intraday record in early trade Thursday, SPCE is now down 2% on the day.
(Terence Gabriel)
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LAYOFFS PERSIST, LABOR COSTS RISE, BUT FACTORY ORDERS INCREASE (1100 EST/1600 GMT)
Data released on Thursday revealed an economy still hemorrhaging jobs a year into the pandemic recession, with factory orders and labor costs heating up amid ongoing vaccine deployment.
The number of U.S. workers filing first-time applications for unemployment benefits USJOB=ECI fell last week to 779,000 according to the Labor Department, 51,000 fewer than economists estimated. any decrease is welcome news, jobless claims have stubbornly remained above 665,000 - the nadir of the Great Recession - for coming up on a year.
"Additional fiscal stimulus and broader vaccine diffusion will put the labor market on a better footing around mid-year," writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics (OE). "But in the near term, we expect jobless claims to remain elevated by historical standards as the pandemic continues to restrict activity."
Continuing claims USJOBN=ECI , reported on a one-week lag, dropped by 193,000 to 4.592 million.
The data sample was taken after the survey period for the Labor Department's comprehensive employment report expected on Friday.
The Commerce Department piped in today, with its announcement that factory orders USFORD=ECI rose by 1.1% in December, faster than the 0.7% anticipated but a slight deceleration from November's upwardly revised 1.3% advance. advance was limited by a 51.7% plunge in commercial aircraft orders, which, as addressed below in the Challenger Gray report, contributed to the aerospace sector's spike in layoffs.
The deceleration jibes well with the Institute for Supply Management's purchasing managers' index released on Monday, which showed the U.S. manufacturing sector's expansion losing a bit of momentum. Labor Department also released fourth-quarter data on labor costs USLCP=ECI and productivity USPROP=ECI .
The report showed labor costs jumped by 6.8% on a quarterly annualized basis in the last three months of 2020, a reversal from the third-quarter's 6.6% decline and a bigger increase than the 4% consensus.
Productivity, on the other hand, fell more than expected, dropping by 4.8%.
"The productivity and costs numbers have been so noisy since Covid struck that the trend has been lost," says Ian Shepherdson, chief economist at Pantheon Macroeconomics. "The Q1 numbers likely will be soft - though better than Q4 - and then Q2 and Q3 should see a substantial post-Covid lift."
"This will drive down the rate of growth of unit labor costs, which right now appear to be signaling big spike in inflation," Shepherdson adds.
Finally, a report from executive outplacement firm Challenger, Gray & Christmas revealed that pre-announced job cuts by U.S. companies USCHAL=ECI rose by 3.3% in January to 79,552.
Demand downturn was cited as the most common reason, and the aerospace/defense sector, hit by drying up new orders referenced above, was the hardest hit.
Year-on-year, January planned layoffs were 17.4% higher.
"While cuts were higher than average last month, we are seeing a leveling off of announcements, which may bode well for recovery in the coming months," says Andrew Challenger, senior vice president at Challenger Gray. "Companies may be reassessing their staffing levels and waiting on the impact of the relief bill before making any additional workforce decisions."
Eyes now turn to the January jobs report due tomorrow morning, which is expected to show a paltry 50,000 increase in nonfarm payrolls, with the unemployment rate holding firm at 6.7%.
The dip in claims, along with a series of upbeat earnings reports put investors in a buying mood in morning trading.
All three major U.S. stock indexes were modestly higher, with small caps and some of the cyclicals out front.
(Stephen Culp)
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WALL STREET EDGES UP WITH STIMULUS, DATA IN VIEW (1010 EST/1510 GMT)
Wall Street's three major averages are modestly higher early in Thursday's regular session as investors appear to be clinging to stimulus hopes and economic data showed some promise. .N
On Thursday morning, data showed that the number of Americans filing new applications for unemployment benefits decreased last week, suggesting that the labor market was stabilizing as authorities started to loosen pandemic-related restrictions on businesses. The Labor Department said seasonally adjusted initial claims were 779,000 for the week ended Jan. 30, compared to 812,000 in the prior week and 830,000 applications expected by economists polled by Reuters. U.S. worker productivity fell at its steepest pace since 1981 in the fourth quarter, the trend remained solid as the COVID-19 pandemic weighs heavily on less productive industries like leisure and hospitality. Wednesday, the Democratic-controlled U.S. Congress worked to pass President Joe Biden's $1.9 trillion COVID-19 relief package without Republican support, as the White House said it was flexible on a key element of the plan. were a mixed bag with Qualcomm Inc QCOM.O shares the biggest drag on the S&P after it said late Wednesday that semiconductor supply constraints were hampering its sales growth. PayPal Holdings Inc PYPL.O is the biggest boost after it beat Wall Street estimates for quarterly profit on Wednesday, with a coronavirus-driven shift to online shopping and digital transactions driving record payment volumes. financial sector .SPSY is the biggest percentage gainer among the S&P's 11 major sectors, while materials .SPLRCM is the biggest decliner.
Here is your morning snapshot:
(Sinéad Carew)
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NASDAQ COMPOSITE: CRACK UNDER THE SURFACE? (0900 EST/1400 GMT)
The Nasdaq Composite .IXIC ended just slightly lower on Wednesday, finishing only around 25 points, or just 0.19%, below its January 25 record-high close of 13,635.992.
Meanwhile, the Nasdaq New High / New Low (NH/NL) index .AD.O , a measure of internal strength, finished at its lowest level in nearly 3 months January 29, the Nasdaq NH/NL index ended a 46-trading-day streak of greater than 90% readings. This was its longest such streak since a 46-trading-day run from March 1 to May 4, 2010. Of note, back then, once the streak ended, and with the NH/NL index then deteriorating, the Composite ultimately collapsed nearly 20% over the next 47 trading days.
Additionally, the NH/NL index's recent high, on January 21, was 96.4%, or just decimals below the 96.6% high hit during the 2010 streak. As of Wednesday, the measure has now deteriorated to 88.5%.
It now remains to be seen if the January 21 high marked a momentum peak for this measure, and if the Composite simply became so overheated that it is vulnerable to weakness. any new IXIC high, unconfirmed by the NH/NL index, will start the clock ticking on a divergence pattern. Just since early last year, periods of market instability were preceded by this measure diverging from the Composite.
(Terence Gabriel)
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FOR THURSDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: IXIC02042021
https://tmsnrt.rs/39NGceA Wall Street gains modestly
https://tmsnrt.rs/2MYaQZm Jobless claims
https://tmsnrt.rs/3oIvJFi Factory orders
https://tmsnrt.rs/3awG3uV productivity and labor costs
https://tmsnrt.rs/2LnklBc Challenger Gray
https://tmsnrt.rs/3pObpnt UFO02042021
https://tmsnrt.rs/2YJFGrx
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Terence Gabriel is a Reuters market analyst. The views expressed are his own)