* Major indexes down, Nasdaq lags most
* Comm services, tech fall most among sectors
* Real estate, healthcare top sector gainers
June 25 - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Lewis Krauskopf. Reach him on Messenger to share your thoughts on market moves: lewis.krauskopf.thomsonreuters.com@reuters.net
RIPPLES FROM A PHARMA MEGA MERGER (1125 EDT/1525 GMT)
Drugmaker AbbVie's ABBV.N deal on Tuesday to buy Botox-maker Allergan (NYSE:AGN) AGN.N for about $63 billion is making waves in the stock market. shares, which were surging about 27% in late-morning trade, were the biggest individual boost to the S&P 500 .SPX , while the roughly 15% drop for AbbVie (NYSE:ABBV) shares were one of the biggest drags on the benchmark index.
Shares of other smaller specialty drugmakers were getting a lift following the deal's announcement.
U.S. shares of Teva Pharma TEVA.TA TEVA.N were up over 6%, while shares of Mallinckrodt (NYSE:MNK) MNK.N , Endo International ENDP.O and Jazz Pharmaceuticals JAZZ.O were up around 5%, and Mylan MYL.O gained more than 3%.
"I think the rising tide of the big ABBV-AGN deal is lifting all boats today,” Kevin Kedra, an analyst at G.Research, said in an emailed comment.
Healthcare .SPXHC was one of the top-performing S&P 500 sectors of late-morning trade, on an otherwise down day for the major indexes.
(Lewis Krauskopf)
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FED PUT OR FED TRAP? (1002 EDT/1402 GMT)
The S&P 500 .SPX broke to all-time highs last week after the Federal Reserve indicated it was poised to start cutting interest rates. But the beginning of a Fed cutting cycle may not warrant such enthusiasm for stock investors, according to UBS strategist Francois Trahan.
In a note, Trahan writes that lower rates will only help when they can foster a recovery in leading economic indicators, "which history tells us is unlikely to occur before 2020 as rates work with a long lag."
"Unfortunately, gone are the days when lower rates led to an immediate recovery in market multiples," Trahan writes. "In a nutshell, we see the stage being set for a major disappointment."
The strategist draws a comparison to the first declines in the Fed funds rates in 2001 and in 2007, when the S&P 500 temporarily rose, before falling steeply.
"These short-lived rallies proved to be a trap for investors as market multiples soon reverted to trend and continued to compress in the face of weaker leading indicators," he writes.
Trahan is closely watching S&P 500 expected earnings growth. He notes that S&P 500 forward EPS growth has slowed from 22.9% in September of 2018 to about 5% now.
"The pace of the slowdown in S&P 500 earnings growth argues for a negative growth rate sometime at the end of Q3 this year," Trahan writes.
"We expect this to be a catalyst for the index, a negative catalyst that is," he writes.
(Lewis Krauskopf)
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DOW INDUSTRIALS: STRIVING FOR THE HIGHS (0915 EDT/1315 GMT)
The Dow Jones Industrial Average .DJI is only 0.38% from its 26,828.39 record high close and only 0.84% shy of its 26,951.81 all-time intraday high. Thus, it won't take much in the way of additional gains for the blue-chip average to see fresh records.
However, if the Dow is forming a large expanding triangle from its early 2018 high, upside can be limited prior to another period of intense market weakness. (Click on chart below)
Indeed, in order to complete the fourth swing within the expanding triangle, the advance from the December low can challenge the upper boundary of the pattern (now at about 27,300). If so, it suggests only about 2% upside from Monday's close (26,727.54).
From there, the risk could be a sharp multi-month decline to complete the expanding triangular formation (the 5th and final swing - ending a more protracted and deeper correction from the early 2018 high). the structure of the thrust off the early-June low may require slightly more back and fill, prior to a final push toward the pattern's upper boundary. However, support in the 26,247.67/25,958.66 area can look to contain weakness if the advance is to remain intact.
A Dow close above the upper boundary of the expanding triangle can suggest another pattern at work, with room then for extended gains. Gabriel)
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