* S&P 500, Nasdaq in positive territory, DJI slips

* Cons disc leads S&P sector gainers; healthcare weakest group

* Dollar, gold, crude slip; bitcoin up slightly

* U.S. 10-Year Treasury yield ~1.59%

Oct 18 - 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

DISSECTING ESG FUNDS (1345 EDT/1745 GMT)

Demand for environmental, social and governance (ESG) exposure "has reached a fever pitch" with no end in sight, but investors need to "look under the hood" of each ESG exchange-traded fund (ETF), Jefferies analysts said in a strategy report on Monday.

Assets in 69 ESG ETFs tracked by Jefferies have grown to $78 billion from $51.1 billion at the start of 2021 with inflows so far in 2021 of $22.5 billion, nearing last year's $27 billion, according to the report.

Still, performance and sector weights vary among the funds, it added.

The iShares MSCI KLD 400 Social ETF DSI.P , the best performer, which is up more than 20% year to date, looks different than the S&P 500 with 33% of its portfolio in technology and 11% in communication services, while health care is underweight by 3.3% and financials by 2.3%.

"Even though the weighted-average market cap is over $500 billion, this is smaller than that of the S&P 500, and the average and median are also below that of the benchmark," the report noted.

Meanwhile, the two weakest performers -- iShares ESG Aware MSCI EM EFT ESGE.O and iShares ESG MSCI EAFE EFT ESGD.O -- have a global approach and are not keeping up with U.S. indexes.

"These ETFs have some smaller names than that of the S&P 500, and it is reflected in the weighted-average, average, and median market caps being much smaller than that of the S&P 500," the analysts wrote.

(Karen Pierog)

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AS OIL HEATS UP, CONSUMERS FEEL THE CHILL (1215 EDT/1615 GMT)

Julian Emanuel, chief equity and derivatives strategist at BTIG, is out with some thoughts on oil prices.

Emanuel says that over many decades, commodities, unlike equities, have been inherently mean reverting, and that the cure for high prices is high prices.

In any event, turning his attention specifically to crude oil, which is still the global economy's primary fuel, Emanuel says that back in April 2020, he thought negative WTI would lead to higher oil prices and energy share outperformance. However, he also says he "didn’t imagine 18 months later we’d ask 'How High is Too High'?"

Emanuel takes the 24-month moving average (MMA) of the monthly average price of front month WTI and looks at the deviation from the 24-MMA. According to his analysis, the top 5% of observations in the data, 57% above the 24-MMA, have, on average, led to an economic slowdown and increased equity market volatility, along with medium-term small cap outperformance.

He says the current 57% threshold is $82/bbl., seen last week for the first time since 2014.

Near term, Emanuel expects stocks to remain rangebound. However, looking into 2022, he believes that a cold winter could

keep oil prices elevated and "could put a further chill into an already defensive minded and inflation preoccupied consumer."

Here is a monthly chart of NYMEX Crude Futures CLc1 :

(Terence Gabriel)

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DEALING WITH D.C.'S POLICY CHOICES (1105 EDT/1505 GMT)

The ultimate outcome for infrastructure and "Build Back Better" spending in Washington is conservatively estimated to total "a still robust" $2.5 trillion over 10 years, which is less than some progressive lawmakers might want, but enough to impact markets, according to a research report from Morgan Stanley strategist Michael Zezas on Sunday.

It pointed out the bipartisan infrastructure framework for spending and tax credits could lead to a positive re-rating of the construction sector and a substantial boost in demand for clean technology companies.

Corporate taxes are likely to be hiked to support the spending. That could bring down forward guidance, which investors may not have yet priced into the market.

"In the near term, that may prompt U.S. equity indices to price in a greater chance of a sustained economic slowdown," the report said. "But such weakness would likely be more of a correction than a bear market signal, as we expect that the total fiscal package would ultimately be GDP-supportive."

As for fiscal policy being a catalyst for stagflation: "We don't buy it and see opportunities in macro markets to take the other side," Zezas wrote.

(Karen Pierog)

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MAJOR U.S. INDEXES OFF EARLY LOWS, NOW MIXED (1012 EDT/1412 GMT)

Major U.S. indexes initially dipped on Monday in response to slowing economic growth in China and as a relentless surge in oil prices is fueling concerns about elevated inflation. .N

However, the Nasdaq Composite .IXIC has quickly fought its way back into positive territory, while the S&P 500 .SPX is just shy of flat and the Dow Jones Industrial Average .DJI is just modestly red.

With Monday's near 1% gain, NYMEX Crude futures CLc1 are now up around 71% year-to-date and hitting seven-year highs. They are also on track to rise for a 9th straight week. If so, it would be CLc1's longest winning streak since an 11-week run of gains from March to May 2015.

With this, energy .SPNY is posting the biggest percentage rise among the major S&P 500 sectors so far today.

And with the U.S. 10-Year Treasury yield US10YT=RR flirting with the 1.60% level, interest-sensitive utilities

.SPLRCU are taking the biggest hit.

Meanwhile, September U.S. industrial production month over month and capacity utilization numbers were below estimates. The October NAHB Housing Market index came in above the Reuters Poll.

Here is where markets stand in early U.S. trade:

(Terence Gabriel)

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THANKS TO TINA, GS SAYS STOCK ALLOCATION WILL HIT NEW RECORD IN 2022 (0913 EDT/1313 GMT)

Strategists at Goldman Sachs say households, foreign investors, mutual funds and pension funds (84% of the U.S. equity market) allocate a record 52% of their combined assets to equities, surpassing the previous record high of 51% set during the Tech Bubble in 2000, and the level will climb even higher in 2022.

The alternatives to equities are unattractive, GS strategists say, with cash yielding essentially nothing, and will likely remain at the lower bound for the next year.

Also supporting increased allocation to equities will be an improving macro backdrop in 2022, but GS also expects only 2% EPS growth next year, while the modest buyback rebound relative to earnings suggests that buyback growth will far outpace earnings growth in 2022.

GS says rising interest rates and share prices have helped pension funding levels and will drive $150 billion of net equity selling by retirement funds in 2021 followed by a similar amount in 2022.

(Shreyashi Sanyal)

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NASDAQ COMPOSITE: TROOPS SUDDENLY RETREAT (0845 EDT/1245 GMT)

Since Oct. 4, when the Nasdaq Composite .IXIC nearly tagged its rising 200-day moving average (DMA), the tech-laden index has seen a near-5% rally. With this, the Nasdaq daily Advance/Decline (A/D) line also managed to chop its way higher.

Despite the IXIC's third-straight daily gain on Friday, the A/D line turned down just as it neared an important resistance line:

On Friday, the Nasdaq breadth measure backed away from a resistance line from late-June. This line capped the A/D line's late-September bounce, leading to the composite's deeper decline into its early-October trough.

Thus, it would appear the Nasdaq is at an important juncture, in terms of how the great mass of its troops is poised to react. If the A/D line resumes its decline from its February peak, and take out its August low, the composite may also turn tail and run.

Conversely, if the A/D line can overwhelm the resistance hurdle it may add confidence in more sustained Nasdaq strength. Even in that event, the A/D line would still face barriers in the form of its 200-DMA, as well as the resistance line from its February high.

(Terence Gabriel)

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FOR MONDAY'S LIVE MARKETS' POSTS PRIOR TO 0845 EDT/1245 GMT - CLICK HERE:

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