Small caps may need very hot or cold, no in-between
S&P 500, Dow turn red; Nasdaq ~flat
Energy leads S&P 500 gainers; healthcare weakest group
Dollar up slightly; crude up >2%; bitcoin jumps <5%; gold dips
U.S. 10-Year Treasury yield edges up to ~3.65%
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
SMALL CAPS MAY NEED VERY HOT OR COLD, NO IN-BETWEEN
The Russell 2000 .RUT small cap index was on track for its fifth straight day of gains on Tuesday and was just roughly 3% below its July 31st intraday record high.
The sector has come into favor recently as investors have been preparing for the start of the Federal Reserve rate cutting cycle, due on Wednesday. Smaller companies are more sensitive to interest rate changes as they are more dependent than larger cap companies on floating rate loans.
Patrick Palfrey, strategist at UBS said in research issued Tuesday that unprofitable small cap companies should benefit more than profit-making peers from Fed rate cuts. He notes that 27% of companies in the RUT are non-earners, negative in both trailing and expected earnings.
Palfrey says that the loss making companies are 2.5 times more sensitive to rate changes than profitable small caps and 8 times more sensitive than large cap companies.
However, in her note issued on Monday, RBC's head of global equity strategy research, Lori Calvasina wrote that "valuations are no longer cheap" for the RUT and "positioning is back to 3-year highs."
"We think much of the easy money from Fed cuts in Small Caps has been made, and that for Small Caps to see a sustained outperformance trade take hold, either a recession needs to occur (when Small Caps benefit from anticipation of cyclical recovery) or near-term economic tailwinds need to improve," Calvasina wrote.
And even if the economy manages a soft landing she said "we suspect a hot economy rather than a so-so economy is needed for this economically sensitive part of the equity market to embark on a longer-term outperformance cycle."
The RUT was last up 0.8% on the day while year-to-date it is up 9.8%.
In comparison the S&P 500 .SPX was down 0.2% on the day, and is up ~17.9% YTD.
(Sinéad Carew)
*****
FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
WHAT HAPPENS TO YIELDS AFTER THE FED? THREE SCENARIOS - CLICK HERE
TUESDAY DATA: LESS UNHAPPY DAYS ARE HERE AGAIN - CLICK HERE
S&P 500 FLIRTS WITH RECORD HIGHS - CLICK HERE
ACTIVE INVESTING BACK IN VOGUE AMONG RETIREMENT ADVISERS, SURVEY SHOWS - CLICK HERE
S&P 500 INDEX EYES ITS RECORD HIGHS, GETS SET FOR FED - CLICK HERE -CLICK HERE
YEN RALLY: SLAM DUNK OR WIDOWMAKER? - CLICK HERE
EUROPEAN CYCLICALS READY TO REBOUND - MORGAN STANLEY - CLICK HERE
EUROPEAN BANKS CHEAP ENOUGH TO ABSORB RATE CUTS - UBS - CLICK HERE
CAN TRUMP WEAKEN THE DOLLAR? - CLICK HERE
STOXX ON THE UP - CLICK HERE
EUROPEAN FUTURES EDGE HIGHER ON FED OPTIMISM - CLICK HERE
YEN'S BIG WEEK BEGINS - CLICK HERE
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
