U.S. equity index futures red; Russell 2000 off ~0.8%
Jan building permits > estimate; Jan housing starts < estimate
Euro STOXX 600 index down ~0.7%
Dollar up; crude, bitcoin both up >1%; gold ~flat
U.S. 10-Year Treasury yield rises to ~4.57%
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LARGE CAPS PARTY, SMALL CAPS LEFT OUT
The S&P 500 index .SPX, the Nasdaq 100 .NDX and the large-cap Russell 1000 index .RUI, all ended at record closing highs on Tuesday. With this, both the Nasdaq composite .IXIC and the Dow Industrials .DJI are within striking distance of their record closing levels (down just 0.66% and 1.02% from these highs).
However, the small-cap Russell 2000 .RUT still has much work to do if it's to join the new highs' party. Indeed, the RUT is more than 6% below its November 2021 record closing high.
Last week, on February 12, the RUT/RUI ratio fell to 0.6790, or its lowest level since July of last year:
The July 2024 trough was the ratio's lowest print since December 2000. Thus, in terms of relative performance, small-cap bulls want to see the July low hold, or else the April 1999 all-time low at 0.5751 may be at risk.
On the plus side, the ratio has ticked up slightly since its February 12 low, ending Tuesday at 0.6804.
Meanwhile, of note, on a yearly basis, the ratio is on a record losing streak. It ended 2024 down for an eighth-straight year, and it's negative so far this year. That said, given this losing streak, it may be extended to the downside, and remains ripe for a reversal. A rally above 0.6924 will see it turn positive for the year.
The ratio's descending 200-day moving average ended Tuesday at 0.7070. A reversal above the July 2024 high, at 0.7579, would end a long-term pattern of declining peaks and troughs from the ratio's March 2014 all-time high, which would suggest a significant turn in favor of small caps relative to large caps.
(Terence Gabriel)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
WHAT DOES EUROPE NEED FOR FURTHER RE-RATING? - CLICK HERE
FRENCH CORPORATE SPREADS: GLASS HALF FULL OR HALF EMPTY? - CLICK HERE
MARKETS TOO RELAXED ABOUT CANADIAN DOLLAR DECLINES - WESTPAC - CLICK HERE
WHO CARES ABOUT TARIFF THREATS? - CLICK HERE
EUROPE BEFORE THE BELL: STOCKS RALLY CALMING DOWN - CLICK HERE
MORNING BID MARKETS BECOMING NUMB TO TARIFF VOWS CLICK HERE
RUTRUIRatio02192025 https://tmsnrt.rs/3QmqzPF
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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