|Day's Range||1,632.65 - 1,650.19|
|52 Week Range||1,266.92 - 1,654.07|
Stocks are mixed Thursday as investors continue to monitor the U.S.-China trade negotiations. Finding opportunities in small caps in an environment where large caps have done better can be a challenge. Villere Balanced Fund Portfolio Manager Sandy Villere joins the On the Move panel to discuss.
We finally got some movement. I noted on Wednesday that the McClellan Summation Index had ticked up, but not enough to see with the naked eye. After Thursday's rally, we can finally see it. I would, however, note something rather odd: Breadth was better on Wednesday -- when the S&P was up nine points and the Russell 2000 was flat -- than it was on Thursday with the S&P 500 up 27 and the Russell up about 1%.
U.S. stocks surge to new records Thursday propelled by reports the U.S. and China had reached at trade deal to avoid new tariffs due on Sunday, and roll back existing levies, in exchange for purchases of American agricultural products
CORRECTION: Ryan Kelley’s name was misspelled in an earlier version of this article. It has been corrected. Momentum has been the sweet spot for much of this bull market. Since the start of 2014, momentum stocks in the Russell 1000 index (RUI) are up 187% compared to 166% for the index, according to T.
Small-cap equities are getting some renewed praise these days and it's easy to see why. The Russell 2000 Index is up 2.22% this month while the S&P SmallCap 600 Index is higher by 1.22% and both are within ...
(Bloomberg) -- Smaller U.S. companies, which have been lagging behind their larger counterparts in the stock market for three years in a row, appear to be regaining favor and could take the lead next year.Among five strategists surveyed by Bloomberg, four expect small-cap stocks to outperform in 2020. Steven Desanctis at Jefferies, in particular, forecasts the benchmark Russell 2000 to rise 7% to 1,750 through next December. That’s higher than the 5% increase that the firm predicts for the S&P 500, a counterpart gauge for large-cap stocks.While not a huge amount, better gains would mark a reversal from the past three years, when the Russell 2000 trailed the S&P 500 annually in a streak of sub-par returns not seen since 1998. Small-caps have started picking up momentum in recent months as optimism over trade talks and the economy helped restore appetite in a group that by some measure is trading at a 18-year low relative to large-caps.“Small-caps could be the place to be,” Dan Veru, who helps oversee $2 billion as chief investment officer at Palisade Capital Management, said in a telephone interview. “You’ve seen the underlying strength of the economy. If we do in fact get a trade deal, that’s going to make those more U.S.-centric companies much more exciting.”To be sure, with the Russell 2000 climbing 21% in 2019, the return is far from disastrous. But in a market where the S&P 500 is up 25%, it looks less stellar. Smaller companies lost their allure as profit slumped the most since 2009 and frequent recession fears drove investors into the safety of larger firms. The pendulum may swing back in their favor in 2020 as economic indicators from truck orders to manufacturing are poised to turn the corner, strategists say.“We expect small caps to outperform large caps in the coming months as we shift from ‘Downturn’ to ‘Recovery’ in the U.S.,” Jill Carey Hall, a Bank of America strategist, wrote in a note last month. She forecasts the Russell 2000 will beat the bank’s projected 5% return for the S&P 500 next year.There are signs that sentiment toward the sector has been improving in recent months. After positioning defensively for much of 2019 and fleeing exchange-traded funds tracking smaller companies, investors have come back to the strategy. Small-cap ETFs have seen inflows in three of the past four months and are on pace for net inflows this year -- albeit their smallest since 2012. Overall, investors have added $3.8 billion to the funds in 2019, the data show.Still, not everyone shares the positive view on small-caps. Ned David Research continues to favor large companies into next year, saying the group is more vulnerable to downturns should the 10-year economic expansion unravel.Here’s more on what strategists are saying about the sector’s outlook:BofA Head of U.S. Smid Cap Strategy Jill Carey HallBank of America recommends owning small caps vs large caps in 2020, a reversal from this year’s positioning.Hall said one key indicator to watch is the Institute for Supply Management manufacturing index, because it’s the most correlated with small-caps. Even as the measure contracted for a fourth straight month in November, BofA sees “multiple signs the ISM could be troughing,” she wrote, citing rebounding truck orders, improvements in the OECD Composite Lead Indicator, and the bank’s own industrial momentum indicator.BofA also holds the view that “globalization has peaked” and capital markets will undergo a shift toward “local” from “global” as companies work to reduce their exposure to the trade war with China. In a parallel rotation, investors will prefer value over growth stocks as earnings growth picks up, strategists noted. That tends to benefit small caps, which have a larger weight in value than large caps, Hall said. She cited cyclical sectors like industrials as having the most upside.RBC Head of U.S. Equity Strategy, Lori CalvasinaThe bank upgraded small caps to a modest overweight from neutral previously. Calvasina said the group continues to be “deeply undervalued” relative to their larger peers, with the gap sitting more than 1 standard deviations below the long-term average.Asset managers have taken notice as Russell 2000 futures positioning has started to “turn up meaningfully,” she said, citing data from the Commodity Futures Trading Commission. “Note that the re-engagement is happening pretty quickly, and it’s possible that we’ll be back to past peaks on this indicator fairly soon,” Calvasina wrote.The strategist noted that small-caps tend to move with the Chicago Fed National Activity Index (CFNAI), Cass freight shipments, and the yield curve. The CFNAI has started to show signs of improvement, the annual decline in Cass freight shipments has stopped worsening, and the yield curve has steepened, all signs that economic activity might be firming, she said.Jefferies Smid Cap Strategist, Steven DesanctisAs investors await developments on the trade front, Jefferies assumes “something gets inked in ‘20 ahead of the election,” DeSanctis wrote. However, regardless of trade news, the strategist sees the economy growing 2.5% next year and the Fed standing pat on rates. Economists surveyed by Bloomberg forecast 1.8% in real GDP growth in 2020.An accomodative Fed, better growth, and a weaker dollar will more than offset potential market volatility stemming from “lots of DC drama,“ the strategist wrote. He upgraded materials to overweight while warning that utilities may be the most expensive group in the small-cap space, with limited earnings growth ahead.Ned Davis Research, Chief U.S Strategist Ed ClissoldSmall-caps are trading near their cheapest level relative to large caps in 18 years, so there is potential for a mean reversion, strategists led by Clissold wrote in a note last week. However, they cautioned that a “mature” economic cycle doesn’t favor small-caps.“Our macro team’s expectation for the expansion to continue deep into 2020 means that the economic cycle will continue to favor large-caps,“ they wrote. NDR forecasts 1.8% real GDP growth next year.What Bloomberg Intelligence Says:Additional boosts to risk appetite in the form of further interest-rate cuts or solutions to longstanding policy headwinds are likely necessary to drive small-caps back into a leadership position over the S&P 500, in our view. While relative valuations for the size are certainly attractive, low multiples in isolation aren’t enough of a reason to chase risks and must be accompanied by some positive catalyst to propel the index above previous highs.We look to a bottoming in the ISM manufacturing index and a narrowing of high yield spreads back toward 2018 levels as additional confirmation of a lasting Russell 2000 rally.-Gina Martin Adams, Chief Equity StrategistSee Also:Airbus Secures Lead Over Boeing as 737 Max Weighs Into 2020S&P 500 Melt-Up Is So Hot It’s Making Cheerleaders Into Skeptics\--With assistance from Vildana Hajric.To contact the reporter on this story: Tatiana Darie in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Lu Wang, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Some market participants are starting to contemplate the notion that stellar employment figures could help embolden U.S. trade negotiators in a protracted tariff dispute between the U.S. and China—possibly resulting in a delay if not outright scuttling of a long-sought-after resolution. Indeed, a key report of the week from the Labor Department report showed that the U.S. economy created 266,000 new jobs in November, according to the Labor Department, the biggest gain since January and the unemployment rate slipped to 3.5%, a 50-year low. “This positive number could delay any US/China trade agreement, as signs of a stronger US economy will embolden US negotiators,” wrote Chris Gaffney, president of World Markets at TIAA Bank, in a research note after the nonfarm-payrolls report on Friday.
Over the course of 2019, investors have heard plenty about the proliferation of environmental, social and governance (ESG) strategies in the world of exchange traded funds. More recently, they have been ...
Dec. 6: While inflation in the major economies remains comatose, the global economic slowdown may be coming to an end, as more global economic indicators are showing some signs of life. Much of the weakness since early last year has been in global manufacturing, which may also be bottoming. President Donald Trump’s trade wars have been blamed for the global factory recession.
The stock market shot upward Friday, following an unexpectedly strong surge in November job growth and the decline in unemployment to record lows.
The S&P; 500 appears to be at fair value, which makes us wary of buying into a market when more insiders are selling.
Our call of the day comes from a stock bear who says he needs to see one clear signal before he starts jumping back into stocks.
U.S. stocks are set for another day of gains on Thursday, as investors keep up a positive read of the trade-deal tea leaves and watch out for an OPEC meeting.
Major stock indices are on pace to post their biggest yearly gains since 2013 after November’s impressive performance, but there’s still plenty to plough through before the clock strikes midnight on Jan. 1. This week brings retail results from Cyber Monday after early signs of an impressive Black Friday. Time to push aside those Thanksgiving leftovers and get back to work.
Here, we'll look at measured targets for the major indexes, as well as some indicators from last week's last full trading day, and see why a pullback or pause is likely to come.
After trailing the big-cap benchmarks, the Russell 2000 finally hits a 52-week high—usually a very good sign for shares of little companies. Also, where the bargains are in the closed-end fund universe.
With a new round of U.S. duties on Chinese goods scheduled to go into effect in mid-December, worries have ratcheted up after President Trump signed legislation supporting the Hong Kong protesters, angering Beijing. Despite the lowered optimism, sentiment doesn’t appear to be severely damaged. A Wall Street Journal report said both sides were confident they can still get a partial deal done soon as Beijing and Washington have been trying to keep political issues separate from trade talks.
Stocks edged up for a fourth straight day to close at new records Wednesday, supported by rosier U.S. economic data and ongoing hopes for a U.S. - China trade deal, but Wall Street trading volumes were thinner than usual ahead of the Thanksgiving Day holiday Thursday.
Small-cap stocks have been a missing piece of the puzzle as the stock market roared back in 2019 from a fourth-quarter drop last year that saw the S&P 500 (SPX) come within a whisker of a 20% pullback, the widely used definition of a bear market. This week, the small-cap Russell 2000 (RUT) which did fall into a bear market during last year’s rout, posted a potential breakout, hitting its first 52-week high in 15 months on Monday and extending gains so far this week. “The inability for the Russell 2000 to break out was one of the concerning signs present over the past couple of weeks (notice small-caps hadn’t been doing much for most of November), but now that has resolved itself and should be bullish for the broad market,” said Andrew Adams, analyst at Saut Strategy, in a Wednesday note.