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LIVE MARKETS U.S.-Apparel: Reports of the shopping mall's death exaggerated

Published 2018-09-26, 11:02 a/m
Updated 2018-09-26, 11:10 a/m
© Reuters.  LIVE MARKETS U.S.-Apparel: Reports of the shopping mall's death exaggerated

* Major averages churn; changes slight

* Healthcare, comm svs strength, materials underperform

* FOMC expected to raise rates; focus on future path

Sept 26 - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Terence Gabriel. Reach him on Messenger to share your thoughts on market moves: terence.gabriel.tr.com@reuters.net

APPAREL: REPORTS OF THE SHOPPING MALL'S DEATH EXAGGERATED (1100 AM EDT/1500 GMT)

Web-influenced consumers still buy clothes predominantly in-store; "the mall is NOT dead," says DA Davidson in a series of research notes initiating coverage on a host of apparel retailers.

The broker starts TJX Co Inc TJX.N , Burlington Stores Inc BURL.N , Canada Goose Holdings Inc GOOS.TO GOOS.K and PVH Corp (NYSE:PVH) PVH.N with "buy" recommendations, while assigning "neutral" ratings to Urban Outfitters Inc URBN.O , Ross Stores Inc ROST.O , Lululemon Athletica Inc LULU.O and Zumiez Inc ZUMZ.O .

Analyst John Morris attributes "historically high store-level operating margins" to a combination of the power of branding to create shopping destinations, multi-level marketing and fast and responsive supply chains.

American consumers are indeed on a wardrobe spending spree in recent months. U.S. Census Bureau Data shows an 8.3 percent year-on-year increase in retail apparel sales for July, the biggest annual jump since September 2011.

Canada Goose and Lululemon shares have more than doubled in value since the beginning of the year, with TJX and Burlington stores up around 45 percent and 33 percent, respectively.

Meanwhile, the S&P 1500 Apparel Retail index .SPCOMRETA has advanced about 19 percent, year-to-date.

(Stephen Culp)

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MAJOR AVERAGES CHURN AHEAD OF EXPECTED RATE RISE (1010 AM EDT/1410 GMT)

Stocks are mixed in early trade with major averages trading just slightly above or below the flat line.

This as the market awaits an expected rate hike from the FOMC at 02:00 p.m. EDT (1800 GMT), followed by Chairman Powell's press conference. of 11 major S&P 500 .SPX sectors are higher out of the gate. Healthcare .SPXHC is leading with a gain of 0.4 percent. Materials .SPLRCM are lagging with a loss of 1 percent.

Not surprisingly, IBM (NYSE:IBM) IBM.N and Nike (NYSE:NKE) NKE.N are bookends behind the Dow Jones Industrial Average's .DJI early performance. In the wake of a UBS upgrade IBM now accounts for all of the index's early rise. NKE is the biggest drag after its Q1 report terms of economic data, new home sales came in at 629k units, essentially flat with the 630k Reuters poll. Gabriel)

*****

DOW JONES INDUSTRIAL AVERAGE: NAVIGATING CHANNELS (0915 AM EDT/1315 GMT)

With CME Dow Jones futures 1YMcv1 treading water ahead of the open, the Dow Jones Industrial Average .DJI finds itself trying to navigate two channels. (Click on chart below)

Given its recent thrust to new highs, the DJI accelerated out of one channel drawn off its May trough/June high (yellow lines). However, its rise was capped by a more steeply sloped channel drawn from its late-June low/late-July high (red lines).

Indeed, the steeper channel's resistance line capped the rise at 26769.16, leading to a break below its former peak at 26616.71.

With this damage, the DJI needs to stabilize ahead of the broken channel's former resistance line, now support, around 26315.

Falling back inside the former channel can suggest a throw-over and reversal, or failed breakout. Closing below the February reaction high (at 25800.35) can inflict greater damage as then channel support from the late-June low would also have given way.

Thrusting back over 26616.71, however, can put the DJI on track for fresh highs given that the steeper channel's resistance is now around 26875.

(Terence Gabriel)

*****

FUTURES TREAD WATER AHEAD OF FOMC RESULTS (0824 AM EDT/1224 GMT)

Stock futures show slight gains as the market awaits the results of the Fed's policy meeting at 2 p.m. EDT (1800 GMT). the market fully expecting the Fed to raise interest rates, the focus will be on whether signs of an accelerating economy will prompt a faster pace of tightening. the U.S. 10-Year Treasury yield US10YT=RR remains just shy of its 3.1280 percent May high. A push above this level will mark the highest levels in just over 7 years.

This as the U.S. Dollar Index .DXY has fallen about 3 percent from its mid-August intraday high, while Spot gold XAU= appears close to resolving its tight lateral range of the past month.

European markets are generally a touch softer Wednesday, while Asia rallied overnight.

Meanwhile, a couple of Dow .DJI components are busy premarket. IBM IBM.N is rising on a broker upgrade while Nike NKE.N is trading off in wake of its Q1 report. is your premarket snapshot:

(Terence Gabriel)

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https://reut.rs/2O6S9lx DJI09262018

https://reut.rs/2OaqS1z Early09262018B

https://reut.rs/2N5bCy8 U.S. apparel sales and apparel stocks Image

https://reut.rs/2OfHcOy

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