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☆ Funds punished for owning too few Nvidia shares after stunning 230% rally
▼ + stars: | 2023-08-30 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

Yet many funds hold less of the stock in their portfolios compared with Nvidia's weight in key equity indexes, making it tougher for them to beat their benchmarks. Among those funds that held a below-average weight in Nvidia, 85% underperformed the index so far this year, Morningstar's data showed. Nvidia's valuation has been a primary reason keeping some investors away, while others are wary of buying in after the stock’s mammoth 230% run this year. Nvidia shares marked a record high closing price on Tuesday, in the wake of a strong earnings report last week. "The stock has had an amazing rally, but it would be totally normal for it to correct 20-25%."

Persons: Robert Galbraith, Refinitiv, ”, Chuck Carlson, Dow, Goldman Sachs, Goldman, Morgan Stanley, Robby Greengold, Jeremy Schwartz, Schwartz, Michael Purves, Purves, ” Purves, Lewis Krauskopf, Ira Iosebashvili, Matthew Lewis Organizations: Nvidia, REUTERS, Nasdaq, Horizon Investment Services, Reuters Graphics Reuters, Big, Microsoft, Dow Jones, Apple, U.S, Mutual, Morningstar, Tallbacken Capital Advisors, Thomson Locations: Santa Clara , California, Big Tech, New York

Nvidia shares, which had run up in the days leading up to its report, climbed more than 6% on Thursday but pared gains to end the day little changed. However, Nvidia's stock buyback - the fifth-biggest repurchase announcement among U.S.-based companies this year, according to EPFR - surprised some investors. Despite the staggering dollar amount, Nvidia's buyback amounted to only 2.1% of its nearly $1.2 trillion market value, or buyback yield, as of Wednesday. Indeed, some investors welcomed Nvidia's buyback decision. "It’s a show of confidence," said Francisco Bido, senior portfolio manager for F/M Investments' large cap focused fund, which holds Nvidia shares.

Persons: Dado Ruvic, Lip, Daniel Morgan, Morgan, Refinitiv, Tom Plumb, Plumb, buyback, Howard Silverblatt, Dow, Daniel Klausner, Houlihan Lokey, Nvidia's, Francisco Bido, Lewis Krauskopf, Chibuike Oguh, Lance Tupper, Echo Wang, Stephen Nellis, Ira Iosebashvili, Matthew Lewis Organizations: NVIDIA, REUTERS, Nvidia, Companies, Wealth Management, Synovus, Plumb Funds, Arm Holdings, Dow Jones, Apple, Tech, Investments, Thomson Locations: New York, San Francisco

The Adyen share plunge "was because expectations were much higher. Analysts believed that Adyen would take significantly more share in this difficult market environment," said Jefferies equity analyst Hannes Leitner. Was the share price reaction justified? One European equities trader, who asked not to be named, noted there were orders to sell Adyen shares at any price and referred to "apocalypse selling." According to data from Refinitiv, 17 analysts rated Adyen "buy", 12 "hold", and 4 "sell" before the earnings announcement.

Persons: Eva Plevier, Jefferies, Hannes Leitner, Refinitiv, Adyen, Worldline, Italy's, Marco Simion, Pieter van der, ”, Samuel Indyk, Elizabeth Howcroft, Danilo Masoni, Toby Sterling, Dhara, Alun John, Cynthia Osterman Organizations: REUTERS, Analysts, Citigroup, UBS, KPMG, Privately, Thomson Locations: Amsterdam, Netherlands, MILAN, North America, Swiss, Adyen, EMEA, Refinitiv, London, Milan

☆ Wall St Week Ahead Sluggish US earnings may need pick-me-up to support 2023 stock rally
▼ + stars: | 2023-08-11 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. The S&P 500 (.SPX) has edged higher since earnings season began in July, with the benchmark index up 16% in 2023. Third-quarter S&P 500 earnings are seen rising 1.3% on a year-over-year basis, according to Refinitiv, before a 9.7% fourth-quarter earnings rise and a 11.9% full-year increase in 2024. Reuters Graphics Reuters GraphicsMeanwhile, the S&P 500 has become more richly valued. Q2 RESULTSWith 91% of S&P 500 companies having reported second-quarter results, 78.7% posted earnings above analysts' expectations, according to Refinitiv IBES.

Persons: Mike Segar, Eric Freedman, Refinitiv, Anthony Saglimbene, Julian Emanuel, Evercore, Emanuel, John Lynch, Ned Davis, Comerica's Lynch, Lewis Krauskopf, Ira Iosebashvili, Richard Chang Organizations: Wall, New York Stock Exchange, REUTERS, Stock, U.S, Bank Asset Management, Reuters Graphics Reuters, Credit Suisse, Ameriprise Financial, Comerica Wealth Management, Apple, Walmart, Ned Davis Research, Thomson Locations: Manhattan, New York City , New York, U.S

☆ Analysis: US stock gains may grow elusive as boost from inflation slowdown wanes
▼ + stars: | 2023-08-10 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

The S&P 500 (.SPX) has gained more than 16% on a year-to-date basis, though it was last trading largely flat on Thursday. The latest CPI report "is good news. However, another CPI report is due to be released before that meeting. The CPI report is "obviously positive for the markets," said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest Wealth Management. The month of August has delivered on average the third-lowest return for the S&P 500 since 1945, with September ranking as the lowest, according to CFRA Research.

Persons: Carlo Allegri, Jack Ablin, Guy LeBas, Janney Montgomery Scott, LeBas, Paul Nolte, Murphy, Refinitiv, Barry Bannister, Bannister, Lewis Krauskopf, Karen Brettell, Ira Iosebashvili, Paul Simao Organizations: REUTERS, Federal, CPI, Cresset, Sylvest Wealth Management, Research, Thomson Locations: Manhattan, New York City , New York, U.S, Jackson Hole , Wyoming

☆ Analysis: Rising bond yields emerge as pressure point for US stock rally
▼ + stars: | 2023-08-09 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

This year, it’s largely been a different story, with bond yields rising on better-than-expected economic data. The S&P 500 (.SPX) has rallied over 16% from its March lows, despite a roughly 50 basis point increase in the yield on the benchmark 10-year Treasury note over that time. That dynamic has changed in recent days, however, as Treasury yields have approached last year’s high while the S&P 500 has fallen 2% from its July peak. The bank’s analysts called rising yields "an underpriced risk" for the equity market. The S&P 500 fell 2.3% last week, its biggest weekly drop since March.

Persons: Brendan McDermid, it’s, Keith Lerner, Moody's, Peter Tuz, Refinitiv, Lerner, Matthew Miskin, Lewis Krauskopf, Ira Iosebashvili, Grant McCool Organizations: New York Stock Exchange, REUTERS, Federal Reserve, U.S ., BofA Global Research, Advisory Services, Fitch, Apple, Chase Investment, John Hancock Investment Management, Thomson Locations: New York City, U.S, United States, China, Charlottesville , Virginia, Truist

☆ Rising bond yields emerge as pressure point for US stock rally
▼ + stars: | 2023-08-09 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

☆ Wall St Week Ahead Inflation report, bond yields in focus as U.S. stocks rally pauses
▼ + stars: | 2023-08-04 | by ( Carolina Mandl | ) www.reuters.com time to read: +5 min

Investors are also closely watching the path of Treasury yields, which rattled equity markets in recent days by rising to fresh year highs. The S&P 500 fell 2.27% this week, its biggest weekly decline since March 10. Janasiewicz of Natixis said a stronger-than-expected consumer price reading next week could spark a decline of up to 5% in the S&P 500. A stronger-than-expected inflation number next week could also boost Treasury yields further. Rising yields on Treasuries, viewed as among the world's safest investments because they are backed by the U.S. government, can dull the allure of stocks.

Persons: Brendan McDermid, Jack Janasiewicz, Natixis, Aaron Chan, Refinitiv, Tim Murray, Rowe Price, Brent, Ann Miletti, Fitch, Keith Lerner, Lerner, Carolina Mandl, Lewis Krauskopf, Ira Iosebashvili, David Gregorio Our Organizations: U.S, REUTERS, Federal Reserve, Natixis Investment, Amazon.com, Cruise, Treasury, U.S ., Advisory, Wall Street, Amazon, Google, Apple, BofA Global Research, JPMorgan, Carolina, Thomson Locations: Wall St, New York, U.S, Stocks, Refinitiv

☆ Investors still see blue sky ahead for Europe travel stocks as boom abates
▼ + stars: | 2023-07-31 | by ( Danilo Masoni | ) www.reuters.com time to read: +4 min

"For many people, the pandemic is now over, and this is time now for travelling far from home," said Corinne Martin, fund manager at Ofi Invest in Paris. The point at which China announced the end of health restrictions in 2022 was probably the best moment to jump into travel stocks. They remain buyers, noting how at 11 times 2024 earnings, the stock displays an unjustified discount and prices no growth. "Now, vacation budget is no more a variable families adjust," said Jerome Schupp, fund manager at Prime Partners in Geneva. European travel and leisure earnings are seen rising 63% this year and 23% in 2024, according to Refinitiv Datastream.

Persons: Corinne Martin, Ofi's Martin, Martin, Goldman Sachs, Jerome Schupp, Schupp, Cristina Matti, Andrea Scauri, Lastminute, Refinitiv, Lucy Raitano, Conor Humphries Organizations: MILAN, Ofi Invest, Paris . Airlines, Royce, World Tourism Organization, China, Traders, Paris Olympics, UEFA European Football, Ryanair, Europe's, Prime Partners, Visa, Air, Thomson Locations: Paris, Europe, Germany, Geneva, Air France, Lemanik, London

☆ Soaring StanChart still has lots of work to do
▼ + stars: | 2023-07-28 | by ( ) www.reuters.com time to read: +2 min

SINGAPORE, July 28 (Reuters Breakingviews) - Bill Winters’ bank is finally getting its act together – to an extent. London-listed Standard Chartered (STAN.L) on Friday reported its highest first-half revenue and earnings since Winters joined as CEO in 2015. The upgraded 12%-14% top-line growth for this year, from 10% previously, caught investors' eyes, as did a chunky $1 billion share buyback programme. Winters managed to get costs down to 61% of revenue in the first half, close to his 2024 target of around 60%. Even after Friday’s bump, StanChart trades at just two-thirds of 12-month forward tangible book value, using analyst estimates gathered by Refinitiv Datastream.

Persons: Bill Winters, Winters, It’s, Refinitiv Datastream, Liam Proud, Streisand Neto Organizations: Reuters, “, HSBC, DBS, Twitter, Bank of Japan, Thomson Locations: SINGAPORE, London

☆ Thales cyber push meets investor shoulder shrug
▼ + stars: | 2023-07-25 | by ( ) www.reuters.com time to read: +2 min

LONDON, July 25 (Reuters Breakingviews) - France's Thales (TCFP.PA) is doubling down on cybersecurity with its $3.6 billion purchase of U.S. firm Imperva. Thales's boss Patrice Caine briefly considered buying Atos's (ATOS.PA) cybersecurity arm last year, but didn’t go through with it. The purchase values the Thoma Bravo-backed group at 17 times forecast 2024 operating profit, according to Thales. Meanwhile Caine’s push into the racy cyber sector doesn’t seem to register in the group’s valuation. That means investors are sceptical that Thales’s efforts to crack the war against hacking will work out for shareholders.

Persons: Patrice Caine, Thoma, Caine’s, Refinitiv Datastream, Pamela Barbaglia, Liam Proud, Streisand Neto Organizations: Reuters, Thales, Thoma Bravo, BAE Systems, Twitter, Thomson Locations: U.S, Spain

☆ Analysis: Apple's growing stock market heft poses dilemma for fund managers
▼ + stars: | 2023-07-03 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

The company’s weighting in the S&P 500 has swelled to 7.6%, the biggest of any one stock in the history of the benchmark index, according to S&P Dow Jones Indices. If shares of Apple keep rallying, that could hurt the results of active fund managers, who strive to beat indexes such as the S&P 500 or Russell 1000. The cost of limiting Apple shares may be particularly high for fund managers this year, given the stock's swelling weight in indexes. “Fund managers at their own peril don’t hold Apple and a handful of stocks just like it at index weight or about index weight,” Morris said. The stock is still his firm's fourth-largest holding, even though at 4% of the portfolio, it puts it underweight Apple versus the S&P 500.

Persons: Dow, Russell, Todd Sohn, Robby Greengold, Walter Todd, Todd, Alex Morris, ” Morris, Refinitiv Datastream, Peter Tuz, ” Tuz, Lewis Krauskopf, Ira Iosebashvili, Anna Driver Organizations: YORK, Dow Jones, Apple, Microsoft, Nvidia, Morningstar, Greenwood Capital, Research, “, Chase Investment, Thomson Locations: Apple’s, South Carolina, United Kingdom, Russell

☆ Wall St Week Ahead After first-half rally, stocks' July winning streak on the line
▼ + stars: | 2023-06-30 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

The S&P 500 defied recession fears and a U.S. banking crisis to notch a 15.9% gain in the first half. The S&P 500 (.SPX) has posted a positive return in eight consecutive Julys, and the tech-heavy Nasdaq 100 index (.NDX) has climbed in July for 15 straight years. S&P 500 companies are expected to post an overall drop in earnings of 5.7% from the year-earlier period, according to Refinitiv IBES. The S&P 500 is trading at 19.1 times forward earnings estimates, well above its historic average P/E of 15.6 times, according to Refinitiv Datastream. "At some point, this move in interest rates has got to have some consequences for the markets," Matt Maley, chief market strategist at Miller Tabak, said in a note on Friday.

Persons: Brendan McDermid, ”, Mona Mahajan, Edward Jones, Omar Aguilar, Refinitiv IBES, “, John Lynch, Refinitiv, Matt Maley, Miller Tabak, Lewis Krauskopf, Ira Iosebashvili, David Gregorio Our Organizations: New York Stock Exchange, REUTERS, Federal, Nasdaq, ” Reuters, American Association of, Fed, Schwab Asset Management, Apple, Microsoft, Nvidia, Comerica Wealth Management, Treasury, Deutsche Bank, UBS Global Wealth Management, UBS, Thomson Locations: New York City, U.S

☆ Six questions facing US stock investors as 2023's second half nears
▼ + stars: | 2023-06-29 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

With two days left in the first half, the S&P 500 (.SPX) is up 14% in 2023 - a rebound that surprised many analysts after equities’ brutal 2022 decline. If history is a guide, stocks’ strong start may give them a tailwind in the second half. Here are six key questions investors are posing as they assess the market's prospects:WHERE’S THAT RECESSION? While the S&P 500 has gained 14% this year, the equal-weight version of the index -- a proxy for the average stock -- has gained just 4.2%. The S&P 500 tech sector (.SPLRCT) now trades at 27 times forward earnings, according to Refinitiv Datastream.

Persons: Sam Stovall, Refinitiv, Lewis Krauskopf, Ira Iosebashvili, David Gregorio Our Organizations: YORK, Nasdaq, New York Federal Reserve, Treasury, UBS, CAN, Apple Inc, Nvidia Corp, HSBC, Reuters Graphics, Advisory Services, Reuters, Thomson Locations: U.S, Silicon

☆ Analysis: Contrarians bet U.S. energy shares will shake doldrums in 2023's second half
▼ + stars: | 2023-06-28 | by ( David Randall | ) www.reuters.com time to read: +4 min

That has hurt shares of energy companies: after soaring in 2022, the S&P 500 energy sector (.SPNY) has lost nearly 10% this year, making it the index’s worst performing sector. Most investors believe central bank interest rate hikes to fight inflation should keep a lid on global growth for the time being. Yet some are positioning for a rebound in energy shares, drawn by attractive valuations and signs the U.S. will continue to stave off an economic downturn. Stan Majcher, a portfolio manager at Hotchkis & Wiley, is among those counting on oil prices rebounding due to tight supply. “If you don’t get it, the path of least resistance is for oil prices to move much higher," he said.

Persons: Brent, David Lefkowitz, Baker Hughes, Stan Majcher, Refinitiv, Charles Lemonides, Sam Peters, David Randall, Lewis Krauskopf, Ira Iosebashvili, David Gregorio Our Organizations: YORK, UBS Wealth Management, UBS, Federal Reserve, TD Securities, . West Texas, Brent, U.S, drillers, Hotchkis, Wiley, Kosmos Energy Ltd, Bank of America Survey, Hess Corp, Occidental Petroleum Corp, ClearBridge Investments, Thomson Locations: U.S, China, Saudi Arabia

☆ Wall St Week Ahead Lofty valuations on US stocks a growing worry for investors
▼ + stars: | 2023-06-23 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +4 min

The S&P 500 now trades at 19 times its expected 12-months earnings, well above its historic average of 15.6 times, Refinitiv Datastream showed. WFII recently downgraded the technology sector, which has led this year's S&P 500 rally, to "neutral" from "favorable," citing "unattractive" valuations. Goldman urged investors to consider "downside protection" to their stock portfolios, though they expect the S&P 500 to reach 4,500 by year-end, or about 3.5% above current levels. Valuations are even more stretched for the Nasdaq 100 (.NDX), whose 36% rally this year has dwarfed that of the S&P 500. "From a near-term perspective, investors should expect stocks to just cool a little bit."

Persons: Refinitiv Datastream, Goldman Sachs, Sameer Samana, WFII, Goldman, Refinitiv, Michael Purves, Purves, Anthony Saglimbene, Lewis Krauskopf, Ira Iosebashvili, Richard Chang Organizations: YORK, Wells, Wells Fargo Investment Institute, Federal Reserve, Nasdaq, Tallbacken Capital, Deutsche Bank, Ameriprise, Thomson Locations: Wells Fargo

☆ Wall St Week Ahead: Surging US megacap stocks leave some wondering when to cash out
▼ + stars: | 2023-06-02 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

The benchmark S&P 500 (.SPX) has risen 11.5% this year and stands at a 10-month high. The S&P 500 rose 1.45%. The recent surge in Nvidia showed how a stock can keep climbing even after posting hefty gains. At the same time, only 20.3% of S&P 500 stocks have outperformed the index on a rolling three-month basis, a record low dating back five decades, according to Ned Davis. Kotok views narrowing breadth as an ominous sign for the broader stock market, saying that equities also look less favorable in certain asset valuation metrics.

Persons: Ned Davis, Peter Tuz, Jay Hatfield, ” Hatfield, “, Brendan McDermid Michael Purves, Purves, Kevin Mahn, Refinitiv, ”, Mahn, Dow, David Kotok, Lewis Krauskopf, Ira Iosebashvili, Nick Zieminski, Diane Craft Organizations: YORK, BofA Global Research, Ned Davis Research, Chase Investment, Nvidia, Apple, Microsoft, Google, Federal Reserve, New York Stock Exchange, REUTERS, Tallbacken Capital Advisors, Nasdaq, Hennion, Walsh Asset Management, Dow Jones, Cumberland Advisors, Thomson Locations: megacap, BofA, New York City, U.S

☆ Wall St Week Ahead Surging US megacap stocks leave some wondering when to cash out
▼ + stars: | 2023-06-02 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

The benchmark S&P 500 (.SPX) has risen 11% this year and stands at a 10-month high. He is overweight megacaps, including Nvidia, Microsoft and Google-parent Alphabet (GOOGL.O). The recent surge in Nvidia showed how a stock can keep climbing even after posting hefty gains. At the same time, only 20.3% of S&P 500 stocks have outperformed the index on a rolling three-month basis, a record low dating back five decades, according to Ned Davis. In one commonly used valuation metric, the S&P 500 is trading at 18.5 times forward earnings estimates compared to its historic average of 15.6 times, according to Refinitiv Datastream.

Persons: Ned Davis, Peter Tuz, Jay Hatfield, ” Hatfield, “, Michael Purves, Purves, Kevin Mahn, Refinitiv, ”, Mahn, Dow, David Kotok, Lewis Krauskopf, Ira Iosebashvili, Nick Zieminski Organizations: YORK, BofA Global Research, Ned Davis Research, Chase Investment, Nvidia, Apple, Microsoft, Google, Tallbacken Capital Advisors, Nasdaq, Hennion, Walsh Asset Management, Dow Jones, Cumberland Advisors, Thomson Locations: megacap, BofA

☆ Wall St Week Ahead Amid banking woes, faltering US small-caps offer ominous economic sign
▼ + stars: | 2023-05-14 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

NEW YORK, May 12 (Reuters) - A U.S. stocks rally is leaving behind smaller companies, a sign that investors may be bracing for economic turmoil ahead. "Typically in a recession, small caps underperform." Last month it downgraded its view on U.S. small caps from "unfavorable" to "most unfavorable." Some investors are more upbeat about the outlook for small caps, particularly when looking beyond the next several months. One reason is that small caps, being sensitive to economic fluctuations, tend to shine early in a market recovery.

In theory, that should be welcome news for stocks and other so-called risk assets, which wilted under the barrage of hikes last year. Yet some investors worry this year's 6.5% rebound in the S&P 500 has made equities expensive. Many are also wary that the Fed's rate hikes may precipitate a recession later this year. Stocks fell on Wednesday, with the S&P 500 ending down 0.7%, after the Fed's latest policy decision in which the central bank also raised rates by 25 basis points, as markets expected. Friday's U.S. employment report and next week's consumer price index data may give investors a sense of how deeply the Fed's rate hikes have seeped into the economy.

☆ Analysis: Bearish fundamentals, buoyant charts complicate outlook for US stocks
▼ + stars: | 2023-04-21 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +5 min

Technical indicators such as equity price movement largely show stocks are poised to continue a rally that has seen the S&P 500 climb 8% year-to-date, analysts who track them said. TECHNICALLY SPEAKINGThe S&P 500 (.SPX) has traded in a 9.7 percentage point range year-to-date, its narrowest range for comparable periods since 2017. Johnson, who has a year-end S&P 500 target of 4,625, is encouraged by the reversals in downtrends for many U.S. stock indexes. The S&P 500 has traded higher 83% of the time for the full year, returning an average 13.73%, when it hasn't dropped below the preceding year’s December low in the first quarter, a Piper Sandler analysis showed. The S&P 500 is trading at about 18 times 12-month forward earnings estimates compared to its long-term average P/E of 15.6 times, according to Refinitiv Datastream.

Exchange operators' shares have outperformed in the past few weeks, with traders and analysts pointing to signs of investors rotating into exchanges, partly at the expense of banks. "Exchange operators are data and technology businesses with defensive utility-like features, while banks are highly cyclical and exposed to idiosyncratic business model risks". Average daily value traded at the London Stock Exchange (LSEG) (LSEG.L) rose 12.9% month-over-month in March. "Investors tend to look at the exchanges as defensive names. "We continue to like exchange stocks."

☆ Buying Pioneer would be iffy use of Exxon capital
▼ + stars: | 2023-04-10 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

And boss Darren Woods is on track to deliver nearly $10 billion of quarterly net profit with only $11 billion of net debt. All told, Pioneer is expected by analysts to generate about $7.4 billion of operating profit this year. Assume tight-fisted Exxon could manage the same proportion at Pioneer, and it would lead to some $1.8 billion of savings. Pioneer produced about 650,000 barrels of oil equivalent per day in 2022. The company expects total production to rise to 670,000 to 700,000 barrels of oil equivalent in 2023.

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