May 20, 2020 / 5:52 PM / 17 days ago

LIVE MARKETS U.S.-IPO index hits record high as Moderna climbs the ranks

    * Three major indexes up more than 1% each
    * All S&P sectors higher, energy leads with 3% gain
    * Dollar dips; oil, gold gain; U.S. 10-yr Yield ~.68%

    May 20 (Reuters) - Welcome to the home for real-time
coverage of U.S. equity markets brought to you by Reuters stocks
reporters and anchored today by Sinéad Carew. Reach her on
Messenger to share your thoughts on market moves:
sinead.carew.thomsonreuters.com@reuters.net
    
    IPO INDEX HITS RECORD HIGH AS MODERNA CLIMBS THE RANKS (1330
EDT/1730 GMT)
    The Renaissance IPO ETF gained more than 2% and set
a fresh record high on Wednesday as equity markets continue to
heal.
    The ETF has risen for five straight sessions and is now up
about 14% this year, easily outperforming the S&P 500 index's
 8% drop and the Nasdaq Composite's 4% advance
year-to-date.
    Renaissance's ETF tracks a market-cap-weighted index of
recent US-listed IPOs. The fund acquires shares within 90 days
of a company's IPO and sells after two years.
    According to ETF.com, Moderna Inc is now the
fourth-largest weighting in the fund at 6.8%. The vaccine
developer's stock was in seventh place in terms of weighting at
the end of March at 3.4%, according to Refinitiv data.
    Uber Technologies (10.6%), DocuSign (9.1%)
and Spotify (8.8%) are the top three weighted stocks in
the fund, per ETF.com. They also occupied the top three spots at
the end of the first quarter.
    A rising index could perhaps set the stage for a resurgence
in IPO activity. This as insurance policy comparison website
SelectQuote accelerated the pricing of its IPO by one
day to Wednesday on the back of strong investor demand, sources
told Reuters
    Here is your 1-year snapshot of the ETF:
           
 
 
    (Lance Tupper)
    *****
    
        
    STAPLES REMAIN A STRONG INCOME PLAY (1250 EDT/1650 GMT)
    Consumer staples have a track record of outperforming the
broader market during recessions, and they also have a history
of raising dividends regardless of the macroeconomic
environment, strategists at CFRA wrote in a recent note.
    That's good news for investors looking for income-oriented
equities during the current economic downturn. Thirteen
companies in the consumer staples sector are in the
S&P 500 Dividend Aristocrats Index.
    "In fact, Consumer Staples account for a greater percentage
of the prestigious index than any other sector on a
market-cap-weighted basis," they wrote.
    At current market levels, they see Coca Cola and
PepsiCo, which they rate as strong buys; and Procter &
Gamble, Kimberly-Clark and Walmart as the
"most compelling Dividend Aristocrats."
    CFRA has had an overweight recommendation on the consumer
staples sector since March.
    
    (Caroline Valetkevitch)
    *****
    
    ECONOMY DIMS TRUMP'S 2ND TERM CHANCES BUT THERE ARE CAVEATS
(1122 EDT/1522 GMT)
    The stock market may look bullish right now but with the
economy in a terrible state Oxford Economics sees this as a
"nearly insurmountable obstacle" for U.S. President Donald
Trump's chances of being re-elected in November.
    The advisory firm cited an unemployment rate above the
global financial crisis peak, a 6% dip in household income below
pre-virus levels, and transitory deflation for its dim view on
Trump's chance of winning the popular vote. 
    It says its national election model sees Trump gathering
only 35% of votes in what would be "the worst incumbent
performance in a century." 
    And its state-based election model confirms this, with Trump
earning 210 Electoral College votes vs 328 for Democrat opponent
Joe Biden. It sees 7 states with 95 votes turning Democrat:
Iowa, Ohio, Wisconsin, Michigan, Pennsylvania, Missouri, and
North Carolina.
    But, Oxford Economics cites two factors that could
significantly change the results: voter turnout and the
evolution of the coronavirus outbreak.
    If Democrats come out to vote with the same enthusiasm they
had in the 2008 election of Barack Obama, this would mean lead
Florida and Texas to flip along with Arizona, Tennessee, and
Georgia, giving Biden the largest Democrat win since Lyndon B.
Johnson in 1964, according to the research. 
    So while it would take "an economic miracle for pocketbooks
to favor Trump," a low Democratic turnout could still represent
a "path back to the White House," Oxford Economics write. 
    And of course, if the virus is contained this would help
Trump but, "in ways that models can't accurately capture," it
said.
    
    (Sinéad Carew)
    *****  
    
    FALLING REFINANCING PULLS DOWN MORTGAGE DEMAND (1041
EDT/1441 GMT)
Mortgage applications fell by 2.6% last week even as interest
rates inched lower, as tightening credit conditions dampened
cash-out refinancing demand.    
    The average 30-year fixed contract interest rate
shed 2 basis points to 3.41%, prompting the fifth straight
uptick in demand for loans to purchase homes,
according to the Mortgage Bankers Association (MBA).
    But refinancing applications, which now account
for just over 64% of the mortgage market, continue to drop.
    "Despite mortgage rates remaining close to record-lows,
refinance activity slid to its lowest level in over a month,"
said Joel Kan, associate vice president of Economic and Industry
Forecasting at MBA  
    Still, Kan expects the refinancing side to recover in the
coming months as low interest rates and economic uncertainty
convince homeowners to lower their monthly payments.
 
    A rising tide of economic recovery expectations failed to
lift all ships in morning trading. While mortgage bankers and
home improvement retailers both stand to benefit from low
interest rates, S&P 1500 Home Improvement Retail index
 was in the red, but The S&P 1500 Thrift & Mortgage
Bank index was up 4.1%, well outperforming the
broader market.
    Home improvement retailer Lowe's Companies Inc
reported its biggest jump in quarterly same-store sales in at
least 15 years as coronavirus lockdowns prompted a surge in
do-it-yourself projects and home repairs.
    This was on the heels of a jump in same-store sales at
larger rival Home Depot Inc, though that company did miss
earnings expectations on Tuesday, due to a jump in expenses to
keep its stores open during the pandemic.
    Earnings, recovery optimism and a lack of horrible economic
data boosted investor risk appetite on Wednesday, sending all
three major U.S. stock indexes more than 1% higher.
    (Stephen Culp)
    *****
    
    S&P 500: FEELING A BIT FROTHY (0915 EDT/1315 GMT)
    Heading into the March lows, a contrarian measure of
sentiment based on the CBOE equity Put/Call (P/C) ratio spiked
to its highest level in 18 years. (Click on chart below)
    Now in the wake of a 35% S&P 500 rally in just 39
trading days, this same measure has collapsed toward the 9-year
lows that preceded February's major market top. 
    The 5-day moving average of the equity P/C ratio has now
tumbled to 0.52. This puts it in the vicinity of the 0.466 low
it hit in January, and the 0.484 level it saw in February.
    As a contrarian measure of sentiment, this suggests great
complacency and, therefore, the market may be especially ripe
for a downside reversal.
    Indeed, since late 2018, significant market sell offs
developed in the wake of sub-0.60 readings of this measure. That
said, a stronger warning may be when the 5-DMA of the P/C ratio
makes a higher-low against a higher-SPX-closing-high. This
pattern is not yet evident, but could develop quickly.   
    In any event, the current low readings of this measure are
occurring just as the S&P 500 nears resistance at its 100 and
200-day moving averages.
 
 
    (Terence Gabriel)
    *****
    
    
    STOCK FUTURES RISE (0852 EDT/1252 GMT) 
    Wall Street stock futures gained ground on Wednesday as
investors continued to be bullish about the prospects for U.S.
government stimulus and economic improvements as the country
reopens.
    In the previous day's session the S&P 500 gave up its modest
gains in the last hour of trading, as investors reacted to a
report questioning Moderna's recent early-stage trial
results for a potential coronavirus vaccine.
    Additionally on Tuesday, in a sometimes testy hearing before
the Senate Banking Committee,  U.S. Treasury Secretary Steven
Mnuchin and Federal Reserve Chair Jerome Powell said the nearly
$3 trillion in federal rescue programs rolled out over the past
two months were working to support an economy devastated by the
novel coronavirus.
    Here is your premarket snapshot:
    
 
 
   
    (Sinéad Carew)
    *****





   
        
    
    


    
 (Terence Gabriel is a Reuters market analyst. The views
expressed are his own
Lance Tupper is a Reuters market analyst. The views expressed
are his own)
  
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