* Nasdaq on track for ninth gain out of past 10 sessions
* European share close higher, Asian shares up but China dips
NEW YORK, Aug 29 (Reuters) - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Chuck Mikolajczak. Reach him on Messenger to share your thoughts on market moves: charles.mikolajczak.thomsonreuters.com@reuters.net
TRADE HOPES NOT ALL THAT'S LIFTING STOCKS - DATATREK (0250 PM EDT/1850 GMT)
While the recent rally for equities can easily be attributed to hopes global trade disputes would ease, another tailwind may have also emerged, that the Fed may slow the pace of rate increases next year.
DataTrek Research co-founder Nicholas Colas notes Fed Chairman Powell's speech on Friday gave praise to former central bank head Alan Greenspan's inaction during the mid-to-late 1990's, while making no mention of the dot-com bubble or "irrational exuberance" warnings about the current bull run.
By looking at Fed Funds Futures USIRP25F1=R , Colas says the market may have never completely bought into the idea the Fed was locked into two rate hikes this year.
According to CME's Fed Watch Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html?redirect=/trading/interest-rates/fed-funds.html, the odds of a September rate hike are at 96 percent, but the odds of another 25 basis point hike in December were only 64 percent. Taking that out a year to September 2019, the highest odds favor just two increases between October 2018 and September 2019, with the next most likely outcome being one hike.
With the Fed's own median forecast rate of 3.375 percent, and Fed Funds Futures at a year-end of 2.675 percent, the 70 basis point difference is nearly three quarter-point hikes, suggesting the Fed might be revising its rate outlook in the coming months.
(Chuck Mikolajczak)
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STOCKS CONTINUE ADVANCE ON TECH BOOST (0115 PM EDT/1715 GMT)
Stocks continue to climb shortly after midday, powered by gains in tech shares and optimism Canada will reach a deal to join with the U.S. and Mexico in updating the North American Free Trade Agreement.
Tech sector .SPLRCT , up 0.79 percent, and consumer discretionary .SPLRCD , up 0.95 percent, paced the advance. The sectors were boosted by Amazon.com AMZN.O and Alphabet GOOGL.O after Morgan Stanley (NYSE:MS) raised its price target on the stocks.
The Nasdaq was on track for its ninth gain out of the past 10 sessions.
Canadian Prime Minister Justin Trudeau said it may be possible to reach a deal on NAFTA ahead of U.S. President Donald Trump's Friday deadline, echoing optimism from Foreign Minister Chrystia Freeland. were broad, with only telecoms .SPLRCL in the red.
(Chuck Mikolajczak)
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SMALL CAPS: BACK IN BIG BROTHER'S SHADOW (1115 AM EDT/1515 GMT)
Since exiting a bullish triangular pattern on August 21, the small-cap Russell 2000 index .RUT has made new highs. (Click on chart below)
That said, the RUT/Russell 1000 .RUI ratio peaked on June 20 and has since turned down. This highlights developing small-cap underperformance vs large caps. the RUT is up 12.5 percent year-to-date vs. an 8.7 percent rise for the RUI, large caps have been the place to be over the past several months.
Since the June 20 RUT/RUI ratio peak, the RUI has added just 1.2 percent, while the RUI has gained nearly 5 percent. The blue-chip, Dow Jones Industrial Average .DJI is up nearly 6 percent over this period.
Indeed, small caps enjoyed a period of outperformance from late February into mid-June. However, the RUT/RUI ratio was repulsed by its late-2016 high, a level which offered the potential to flip the trend back in favor of large caps.
The RUT's recent triangle breakout was bullish, but in theory is a later-stage event within the context of its trend.
Add in a 7-year resistance line, now about 1760, or just 1.3 percent above Monday's high, and RUT has a hurdle to clear to continue to advance.
Timing can be blunt, but RUT underperformance can flash a warning for the overall market as a willingness to take risk, or animal spirits, wane.
Meanwhile, analysts still like small caps Gabriel
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WALL ST EDGES HIGHER AS TECH ADVANCES (1013 EDT/1413 GMT)
The S&P and Nasdaq rose modestly in the early stages of trading, led by gains in the tech sector, although the Dow was just south of the unchanged mark.
Tech was on track for its seventh straight advance and eighth in the past ten sessions. Alphabet GOOGL.O shares climbed 1.14 percent after Morgan Stanley boosted its price target on the stock to $1,515.
Housing .HGX stocks dipped 0.27 percent after the National Association of Realtors said its Pending Home Sales Index decreased 0.7 percent to 106.2 in July, well short of expectations calling for a gain of 0.3 percent. Mikolajczak)
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DOW JONES INDUSTRIAL AVERAGE: SPUTTERING THRUST (0922 EDT/1322 GMT)
The Dow Jones Industrial Average .DJI is about 2 percent shy of its January record high. That said, as we approach the end of August, it is only about 85 points, or 0.3 percent, away from a record high monthly close of 26149.39.
However, like the S&P 500 .SPX lagging monthly momentum can potentially set the index up for the same pattern of divergence that accompanied major highs of the past 2 decades. (Click on chart below)
Indeed, the DJI's monthly RSI ended January at its most overbought in history. In the wake of the subsequent collapse, the RSI plunged.
The DJI has now recovered to within striking distance of its January finish, yet the RSI is still well shy of its January close.
This momentum lag can flag reversal risk. The RSI falling back below the 70.00 overbought threshold can potentially coincide with a downward acceleration in the index.
If the Dow can maintain an uninterrupted ascent, surpass resistance in the 26425/26435 area and then its 26616.71 high, the RSI can continue to rise.
However, even if this study can exceed the extreme reached in January, it will then, once again, be historically overbought.
As was seen, even a setback to alleviate such an overheated condition can be vicious. The Dow plunged more than 12 percent in just 10 trading days when it reversed from its January high.
Terence Gabriel
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FUTURES POINT TO FLAT OPEN AS TRADE TALKS EYED (0845 AM EDT/1245 GMT)
Stocks were poised for a flat open on Wednesday as investors looked for signs of progress on trade talks between the U.S. and Canada while a deadline for comments on tariffs between the U.S. and China loomed.
After a bilateral deal between the U.S. and Mexico was announced on Monday, Canada was set to join talks on Wednesday in an attempt to rescue the North American Free Trade Agreement. next round of U.S tariffs on $200 billion worth of Chinese goods are expected to take effect in late September after a public comment period ends on Sept. 5. economic growth was a bit stronger than initially thought in the second quarter. In its first revision, GDP notched its best performance in nearly four years, increasing at a 4.2 percent annual rate, up from the initially reported 4.1 percent in July, as businesses boosted spending on software and imports declined. has been light this week, and is expected to dwindle heading into the U.S. Labor Day market holiday.
After the opening bell, pending home sales data for July is due at 10 a.m. EDT (1400 GMT). Housing market data has been lackluster and there are concerns that persistent weakness will eventually spill over to the broader economy.
European shares edged up while Asian shares were modestly higher, although Chinese blue chips dipped as the country's state planner warned of increasing risks to the economy in the second half of the year. Mikolajczak)
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https://reut.rs/2mKwi3Y Futures view for Aug. 29
https://reut.rs/2wq8ojz DJI 0829 2018
https://reut.rs/2MX0mrI S&P, Nasdaq gain but Dow slips
https://reut.rs/2MTpaRB RUTRUI 029 2018
https://reut.rs/2LBwIU0 Stocks climb on tech lift
https://reut.rs/2wqaIHf
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