* S&P 500 and Nasdaq gain

* Financials weakest S&P sector; utilities leads gainers

* Euro STOXX 600 index up ~0.7%

* Gold up and bitcoin up; dollar and crude fall

* U.S. 10-Year Treasury yield ~1.55%

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

WORRIED ABOUT STAGFLATION? TD SAYS BUY GOLD (1345 EDT/1745 GMT)

Investors worried that rising inflation will collide with an increasingly weak economic outlook should turn to gold, which may be “an ideal hedge against the rising risk of stagflationary trends,” analysts at TD Securities said in a report on Wednesday.

Precious metals have been suffering from outflows from exchange traded funds and reduced interest from speculative investors, TD said, and gold futures GCc1 have dipped to

$1,795, from $1,916 in June.

Much of the reduced interest in gold has come as investors prepare for the Federal Reserve to reduce its bond purchases. However, the U.S. central bank is likely to maintain its uber-easy monetary policies for longer than many expect as it continues to aim for full employment, TD analysts including Bart Melek said.

Reasons to own the yellow metal are growing as the global energy crisis intensifies, and “a cold winter could send energy prices astronomically higher, asymmetrically fueling stagflationary winds,” they said, adding that “this translates into a fat right tail in gold prices.”

The bank recommends going long an $1850/$2000 call spread on April 2022 Gold futures GCJ2 .

(Karen Brettell)

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IT'S NOT ABOUT COST PRESSURES - GOLUB (1240 EDT/1640 GMT)

U.S. companies will talk about the cost pressures they are facing as they report third-quarter results in the coming weeks, but investors should focus more on what they say about sales, Jonathan Golub, chief U.S. equity strategist for Credit Suisse in New York, said during the firm's conference call on the U.S. earnings outlook Tuesday.

"What we're going to hear in earnings season is that companies are feeling cost pressures, that that's the problem. And while they're saying that, they're going to be fibbing to you," he said.

"The real issue is that sales are going to be coming in weaker, and ultimately sales are necessary to fuel the margins."

The reason for that is that labor and supply shortages are not allowing companies to fill orders.

"It's not a cost squeeze," he said.

(Caroline Valetkevitch)

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GOOD NEWS – RISING TREASURY YIELDS ARE BULLISH FOR STOCKS - BOFA (1225 EDT/1625 GMT)

Sharp increases in Treasury yields have raised fears that rising borrowing costs will spook riskier assets including stocks, but equities actually perform better on days that yields rise, according to Bank of America.

Data going back to 2005 show that the S&P 500 .SPX and NYSE breadth are stronger on days when 10-year Treasury yields rise, and weaker when the yields fall, Stephen Suttmeier said in a report sent on Tuesday.

On days when the 10-year yield rose by more than 0.10% the S&P 500 gained 69.3% of the time with an average return of

1.18%, and NYSE breadth was positive 73.3% of the time. When yields fell by 0.10% or more, by contrast, the S&P 500 rose only

20% of the time, and posted an average loss of 1.90%, with NYSE breadth only improving 15.3% of the time, Suttmeier said.

That pattern may bode well for stocks in the near-term, with several market breadth indicators making higher lows as they entered this month, even as the S&P 500 posted lower lows. Treasury yields have also increased more aggressively since late September, Bank of America said.

The improvement in market breadth, and a rising 200-day moving average, indicates that recent weakness in stocks is a correction driven by rotation within an uptrend, the bank said.

(Karen Brettell)

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EUROPE CLOSES ON A HIGH AS TECH SHINES (1200 EDT/1600 GMT)

The STOXX 600 ended the day close to the session's high, up

0.7% and now set for weekly gains.

While the Q3 earnings season will only begin in earnest next week in Europe, Germany's SAP lifting its guidance gave a big boost to the tech sector and to sentiment in general.

The tech index rose 2.6%, its best session since May, and was the most performing segment of the stock market.

The Personal and Household Goods index was second, up 1.8%, boosted by UK house-builder Barratt Developments, which reported that forward sales for the past three months had risen above pre-pandemic levels.

Banks weren't that popular, losing 1.5% while in the U.S., JPMorgan JPM.N fell after announcing its results.

After their recent surge, yields are taking a breather across euro zone government bonds, which typically doesn't help banking stocks.

Among individual stocks, France's Spie gained a handsome

8.5% after walking out the auction to buy Engie's unit Equans.

(Julien Ponthus)

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THE SHRINKING RANKS OF HIGHLY RATED CORPORATE ISSUERS (1101 EDT/1501 GMT)

The number of non-financial corporate debt issuers rated in the AAA or AA categories by Fitch Ratings has steadily shrunk over the past 20 years, falling to around 10 from nearly 50, the credit rating agency said in a report on Wednesday.

"Many downgrades were caused by fundamental changes in the underlying business environments, mostly due to increased competition and technological changes," Fitch said, pointing to affected sectors such as telecoms, electric utilities, and retail.

"However, downgrades were also driven by financial policy decisions to increase leverage," it added.

Technology was the only sector where upgrades into highly rated categories were growing over the past decade. The report cited technology's increasing economic role that was strengthened by accelerated digitalization trends during the coronavirus pandemic.

Meanwhile, the oil and gas sector faces long-term pressure due to energy transition factors.

"As a result of the associated execution risk, ratings could come under some pressure in the medium term if the transition is not managed successfully," Fitch said. "However, the relatively slow decline in oil consumption that we currently expect gives the rated entities some time to adapt."

(Karen Pierog)

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INDIAN SUMMER: CPI, MORTGAGE RATES PUT THE HEAT ON (1042 EDT/1442 GMT)

Leaves are falling - and even snow in some parts of the country - but consumer prices and mortgage rates are pushing the mercury higher.

The prices U.S. urban consumers pay for a basket of goods

USCPI=ECI rose by 0.4% in August, an acceleration from the previous month and hotter than the 0.3% consensus.

"We need to bifurcate and see where the inflation is," writes Oliver Pursche, senior vice president at Wealthspire Advisors. "It's not a one-size fits all answer."

Fair enough, so let's delve deeper into the Labor Department's consumer price index (CPI) report. A 6.4% drop in air fares - a predictable adjustment following the spikes in early summer - was more than offset by gains in housing, new cars and gasoline, among others.

Core CPI USCPFY=ECI , which excludes volatile food and energy prices, rose at 4% year-over-year, inline with expectations.

As to whether this report is likely to accelerate or have little effect on the U.S. Federal Reserve's expected timeline for tightening its monetary policy, opinions differ.

"It reassures the Fed because there were no surprises," Pursche adds.

But Peter Cardillo, chief market economist at Spartan Capital, isn't quite so sure.

"Inflation is going to be more long-lasting than the Fed expects," Cardillo says. "In my opinion this accelerates the tapering move and we’ll probably get an announcement next month."

Minutes from the central bank's most recent monetary policy meeting could shed light in that direction.

Core CPI, shown along with other major indicators in the graphic below, continue to soar well above the Fed's average annual 2% inflation target:

Separately, demand for home loans eked out a nominal gain last week, according to the Mortgage Bankers Association (MBA), despite yet another uptick in rates.

The average 30-year fixed contract rate USMG=ECI grew by 4 basis points to 3.18%, marking the third consecutive weekly gain.

Even so, applications for loans to purchase homes

USMGPI=ECI jumped by 1.5%, a gain that was nearly completely offset by a 0.5% decline in refi demand USMGR=ECI , which constitutes the bulk of the total.

"Mortgage rates reached their highest level since June 2021, but application activity changed little this week," notes Joel Kan, associate vice president of economic and industry forecasting at MBA.

Nancy Vanden Hauten, lead economist at Oxford Economics, believes this data points to resiliency in the housing market and suggests home sales could bounce back in September from August's drop.

"We expect the housing market to continue to be buffeted by the crosscurrents of strong demand, limited supply and high prices," Hauten writes. "While mortgage rates remain relatively low on a historical basis, the recent backup in mortgage rates will take an added toll on homebuying affordability at the margin."

Wall Street appeared to be dancing the same tango it's been doing over the last few sessions - starting strong then steadily running out of gas.

Most recently, all three major U.S. stock indexes were well off their opening highs.

The S&P 500 and the Dow were dragged into negative territory by weak financial stocks .SPSY , while a meager gain in tech

.SPLRCT is helping to keep the Nasdaq modestly green.

(Stephen Culp)

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INITIAL U.S. STRENGTH FADES, INDEXES TURN MIXED (1005 EDT/1405 GMT)

After an opening push higher, Wall Street's main indexes have turned mixed. This as investors are digesting a solid rise in monthly consumer prices, and a dip in bond yields. .N

The Dow .DJI and S&P 500 .SPX are now trading down on the day. The Nasdaq .IXIC , although already off its early high, is being boosted by tech stocks .SPLRCT , and is still in positive territory.

Of note, the major indexes, as well as the S&P tech sector, have all fallen three-straight days.

Meanwhile, with the U.S. 10-Year Treasury yield US10YT=RR back down to the 1.54% area, financials .SPSY are taking the biggest hit among S&P sectors.

Here is where markets stand in early trade:

(Terence Gabriel)

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NASDAQ 100 TRIPLE-Qs: GOING WITH THE FLOW (0907 EDT/1307 GMT)

The Invesco QQQ Trust Series 1 QQQ.O , which tracks the Nasdaq 100 index .NDX , is down around 6% from its early September high. In so doing, it has also violated a monthly support line from its March 2020 low.

Meanwhile, one indicator that incorporates both price and volume, the Money Flow index (MFI), continues to track within converging trendlines:

On a monthly basis, and since early 2018, the MFI has been trapped between a resistance line from its 2014 high and a support line from its 2009 low.

After once again topping shy of the resistance line this past August, the MFI appears on track for another test of the support line. Another test of that support line could suggest risk for greater QQQ weakness.

However, if the support line can continue to work its magic, and the MFI can bottom, a significant QQQ low may once again be found.

Conversely, an MFI support line break will end what has been a consistent pattern, and instead suggest potential that QQQ weakness may become a waterfall slide.

(Terence Gabriel)

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FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0907 EDT/1307 GMT - CLICK HERE:

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)