nov 18  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom in a less than uniformly bullish session on thursday the sp 500 spx and nasdaq ixic eked out record closes with investors taking cues from upbeat retail and technology earnings despite hawkish inflation comments from a federal reserve policymaker chips were standouts with the philadelphia se semiconductor index sox gaining 18 and ending at an alltime closing high that said the dow jones industrial average dji dow transports djt sp 500 banks index spxbk nyse fangtm index nyfang and smallcap russell 2000 rut all closed lower more major sp 500 sectors ended down on the day than up breadth also remains an issue the nyse and nasdaq advancedecline ad ratios were a paltry 054 and 0478 given many more issues falling than rising in fact the 10day moving average of the nasdaq ad ratio at 0877 was its weakest reading with the composite ending at a record high since august 24 2020 back then the ixic topped seven trading days later and promptly slid as much as 13 into its late september 2020 trough as president joe bidens announcement on his nominee to head the us federal reserve is awaited cfras chief investment strategist sam stovall looked at how the dow jones industrial average dji has performed under different fed chairs biden is expected to announce his nominee before thanksgivingnovember 25 with reappointment expected for current chair jerome powell though fed governor lael brainard is also in the running read more regardless of bidens eventual pick theres historical encouragement for investors hoping for a continued bull market next year stovall says the dow has posted a nearly 4 median gain over a new fed chairs first six months in office rising twothirds of the time over powells nearly four years in the role the dow recorded an impressive 11 compound annual growth rate cagr according to stovall higher than the median 85 cagr under all past fed chairs however daniel crissinger chair from 1923  1927 presided over a whopping 175 cagr rise for the dow paul volckers tenure 19791987 saw gains of 154 only one fed chairs tenure saw the market decline  the dow tumbled nearly 33 during eugene meyers term in his defense that was during the great depression coming back to the present bca research says brainards appointment is unlikely to spook markets given her assumed more dovish position brainard would introduce some new uncertainty  encourage nearterm inflation concerns and push market sentiment toward the view that the fed will be behind the curve yet investors would probably also believe that a hawkish mistake would be less likely in 202224 bca says barings investment institutes christopher smart recommends watching bank stocks after the nomination annoucement as the real difference lies in powell’s lighter touch on bank regulation and brainard’s strong dissents as postcrisis restrictions have been lifted for 2022 the global wealth management side of ubs expects some revelation of what a new normal looks like after two years marked by lockdown and reopening simply speaking the ubs global wealth management’s chief investment office year ahead 2022 outlook headed by mark haefele chief investment officer at ubs global wealth management is forecasting high rates of economic growth and inflation in the first half the year with lower growth and inflation in the second half and its recommendation are to buy winners of global growth which it lists as cyclicals including eurozone and japanese equities us midcaps global financials and commodities and energy stocks but it notes that slower growth in the second half could start to favor more defensive sectors such as healthcare it also suggests seeking unconventional yields in the form of us senior loans synthetic credit private credit and dividendpaying stocks also with the fed tapering its support a stronger us dollar is in the cards relative to currencies reflecting looser monetary policies such as the euro yen and swiss franc haefele offers three different targets for various asset classes a central target an upside scenario and a downside scenario its central scenario forecast is for the sp 500 to be at 5000 in june which would be a 67 gain from wednesdays close of 468867 and for the euro to be at 112 vs wednesdays close of 11319 this would assume us inflation stays elevated in early 2022 before gradually falling towards 2 by mid2022 with major central banks reducing accommodation gradually and the fed finishing tapering by mid2022 it also assumes the economic reopening keeps a gradual pace through 2022 with the current covid19 wave not escalating enough to require new lockdowns it also would mean chinese growth stabilizes and covid19related restrictions there start to be lifted in 2q and that the united states takes a multilateral and predictable approach to trade policy the ubs upside scenario has the sp hitting 5200 in june a 109 gain and the downside scenario is 4000 a 147 drop the upside assumes things like abating inflation fears or elevated inflation with growth staying well above longterm trend higher than expected fiscal spending a covid fade to the extent that restrictions are lifted faster than expected faster restriction lift in china and an ease in its regulatory crackdown as well as a partial rollback of existing trade tariffs which would boost global growth the downside scenario ubs paints is bleak and includes issues such as rising inflation including persistently high energy prices with sharper than expected growth deceleration more aggressive fed tightening diminishing fiscal spending and consumption that does not fully recover due to bleak covid scenarios that cause more fear and restrictions it also includes greater than expected china restrictions and a broader based property market crisis there along with further regulatory tightening in geopolitics possible downsides it sight are renewed uschina tensions over trade andor taiwan wall streets semiconductor index is surging to record highs on thursday lifted by a rally in nvidia after the graphics chipmakers quarterly report beat lofty expectations and fueled enthusiasm about its opportunity to become a major player in the socalled metaverse nvidia nvdao is jumping nearly 10 to 319 and is on track to close at its highest level ever after it forecast revenue above analysts estimates the silicon valley company is betting on rapid growth in its data center business as more internet companies invest in artificial intelligence and virtual reality platforms nvidias rally is helping to drive the philadelphia semiconductor index sox up 18 putting it on track to close at its highest level ever the chip index is now up 39 in 2021 far outpacing the sp 500s spx 25 gain nvidias market capitalization topped 800 billion with the stock now up almost 150 year to date in a research note entitled the first trillion dollar semiconductor company needham  company analyst rajvindra gill raised his price target for nvidia to 400 from 245 also buoying the chip index advanced micro devices amdo which also stands to gain from the metaverse is jumping 3 a late riskoff move in afternoon trading has sent the paneuropean stoxx 600 to close in negative territory which has only happened once so far this november yields in government bond dropped with the bund going down close to 4 basis points to 0280 leaving just a few rate sensitive sectors to rejoice like real estate stocks up 06 it was definitely not a day for the reflation trade with banks down 1 mining losing 16 and oil and gas retreating 18 all in all the stoxx 600 lost 05 which in the grand scheme of things leaves it only three little points from yesterdays 49058 points alltime high paris cac 40 and frankfurts dax both ended about 02 lower but are still obviously within striking distance of the historic peaks touched earlier in the session with most of the upbeat q3 earnings season now behind us and european stocks hitting records every other day some investors may have felt reluctant to further long the stoxx 600 there are still however many analysts for whom theres still some upside left mark haefele cio at ubs gwm wrote in his daily note this morning that given that policy remains supportive full lockdowns unlikely and the earnings recovery on track further gains are possible moving forward eurozone equities remain one of our most preferred regions he said adding that with low or negative government bond yields in the region msci emu valuations could raise from 16 times 12month forward earnings to 17 jack ablin chief investment officer and founding partner at cresset is out a note discussing credit conditions and what he thinks they mean for stocks at this time ablin says credit conditions are a valuable barometer for managing market risk in this regard he says you want to stay invested when credit conditions are favorable and cut back on risk when credit conditions turn negative he says that the yield premium lenders require to extend credit to lowerquality borrowers is an important means to gauge credit conditions a low yield premium implies favorable credit conditions while a sudden rise in this measure suggests lenders anticipate trouble and require higher compensation cresset’s credit conditions model defines “favorable conditions” as when the yield premium or spread is trading below 90 of its 200day moving average and “negative conditions” as when the spread is trading more than 110 above this longterm moving average according to ablin since 1998 holding the sp 500 during favorable credit conditions and shifting to cash when credit conditions turn negative would have bettered the sp 500 by over 130 percentage points he adds that right now cressets credit condition metrics are saying to hold the sp we will continue to monitor credit conditions on the lookout for our next opportunity to reduce equity market risk and declare victory on this bull market relatively unexciting data arrived on thursday in triplicate singing a song market participants by now have learned by heart while the economy is improving its progress is being hampered by labor and materials shortages the number of us workers filing firsttime applications for unemployment benefits usjobeci barely budged last week according to the labor department initial claims came in at 268000 higher than consensus shaving a mere thousand from the previous weeks upwardly revised number read more still they reached the lowest level since the onset of the covid crisis the trend remains downward hovering at the top end of the range associated with healthy labor market churn and drawing evercloser to prepandemic levels but to what extent can we thank the worker drought for the downward trend layoffs are falling reflective of companies holding on to workers amid a labor shortage writes rubeela farooqi chief us economist at high frequency economics we expect supply to come back online as the cushion from savings diminishes and assuming the threat from the virus continues to recede over coming months for context the number of americans collecting unemployment insurance benefits for two weeks or more could populate the city of austin texas twice over separately its official east coast factories have shifted into overdrive this month the philadelphia federal reserves business index aka philly fed uspfdbeci delivered a print of 39 15 points above economist forecasts and a solid acceleration from octobers 238 the report nicely echoed the empire state indexs similar surge on monday philly fedempire state numbers above zero signify increased activity over the previous month broken down by components the good news is that new orders went to the races and the sixmonth outlook improved less cheery is the downtick in the employment and capex indexes and the continued upward climb of the prices paid segment further evidence that the ongoing supply drought of workers and materials are significant headwinds for manufacturing these numbers all suggest that supply chain pressures remain intense but we expect to see a clear improvement over the next few months as chip supply rises and port logjams ease says ian shepherdson chief economist with pantheon macroeconomicsor finally the conference board cb had its say releasing its latest leading indicators data usleadeci the index posted an october gain of 09 a hair better than analysts expected and a solid improvement over the 01 september reading and suggests the current economic expansion will continue into 2022 and may even gain some momentum in the final months of this year” according to ataman ozyildirim cbs senior director of economic research however rising prices and supply chain bottlenecks pose challenges to growth and are not expected to dissipate until well into 2022 ozyildirim says he goes on to add that gains were widespread among the leading indicators with only the average workweek and consumers’ outlook making negative contributions consumer expectations are indeed more sour than leading indicators and recent consumer spending data might seem to suggest the graphic below shows the leading indicator index compared with the expectations component of cbs own consumer confidence data cbs leading indicator index is an amalgamation of ten economic data points including jobless claims stock prices yield spreads building permits and others wall street appeared to be unimpressed by thursdays economic data however with the three major indexes starting mixed but all trending red as the morning wore on sp 500 back up to battle its highs 0951 est1451 gmt the sp 500 spx is slightly higher in early trade thursday putting it back up to battle its 470170 november 8 record close this after chipmaker nvidia nvdao rallied on robust thirdquarter results while a fresh batch of positive retail earnings indicated strength in consumer spending against the backdrop of rising inflation with its early rise nvda is providing the biggest boost to the benchmark index and with a more than 2 gain the philadelphia se semiconductor index sox has jumped to a new record high that said the major averages are mixed banks spxbk and transports djt are red and more major sp 500 sectors are down than up the nyse fangtm index nyfang which also counts nvidia as a member is up just modestly here is where markets stand in early trade might this junky action mess up the sp 500s rise 0900 est1400 gmt the sp 500 spx ended wednesday only about 03 below its record close just set on november 8 with roughly a month and a half of trading left to go in 2021 the spx has already seen 65 record closing highs so far this year which is the second most ever for a full year the most ever was 77 in 1995 however recent action in the spdr bloomberg barclays high yield bond etf jnkp as a proxy for the highyield sector may be warning that the new highs party may draw to close as action in the riskiest of corporate bonds can potentially provide an important signal for the equity market although timing can be blunt struggling highyield price action can be a sign of less than buoyant sentiment ultimately leading to equity market instability jnk is not in gear with stocks in terms of its trend on wednesday on a weekly basis the etf ended at an eightmonth low even though the spx is flirting with its recent record highs just since early 2020 in the wake of new record highs in stocks sp 500 tops of varying degree came in the wake of even minor weekly jnk divergence additionally jnk is on pace to end below its 40week moving average wma for the sixth time out of the past seven weeks the spx has not closed below its 40wma since latejune 2020 therefore it may be important for the jnk to quickly reverse to the upside in order to keep pace with and confirm any sp 500 ongoing push to new highs for thursdays live markets posts prior to 0900 est1400 gmt  click here terence gabriel is a reuters market analyst the views expressed are his own