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LIVE MARKETS U.S.-In WeWork's wake, it's all about biotech IPOs for now

* Major averages higher * Healthcare, tech lead gainers; utilities, energy in the red * Gold, oil decline; U.S. 10-year Treasury yield at ~1.68% Sept 30 - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by April Joyner. Reach her on Messenger to share your thoughts on market moves: IN WEWORK'S WAKE, IT'S ALL ABOUT BIOTECH IPOS FOR NOW (1400 EDT/1800 GMT) As WeWork officially pulls its IPO, the near-term calendar is chock full of biotech deals. On Monday, the office-sharing startup's newly appointed co-CEOs said the company decided to postpone the offering "to focus on our core business, the fundamentals of which remain strong." Four biotech IPOs are scheduled to price on Wednesday for subsequent debuts on Thursday. The largest deals are spinoffs from UK drug giant AstraZeneca - ADC Therapeutics (~$200 mln) and Viela Bio (~$150 mln). ADC is looking to fund a Phase II trial of its lead drug to treat patients with lymphoma. (See filing Viela's lead drug, for a rare autoimmune disorder called NSOMD that causes blindness and paralysis, has received designation as a breakthrough therapy from the U.S. Food and Drug Administration. (See filing And there are two biotech IPOs on next week's docket, BioNTech and Vir Biotechnology. The larger aspirant is German biotech unicorn BioNTech, which has launched an IPO up to $264 million and is targeting a valuation north of $4 billion. BioNTech has more than 20 drugs in its pipeline to treat cancer and rare diseases, featuring clinical collaborations with Pfizer, Sanofi and the Bill & Melinda Gates Foundation. (See filing But the main issue is whether WeWork's debacle and recent dismal debuts by SmileDirectClub and Peloton Interactive have dented investors' psyche beyond repair. (Lance Tupper) ***** FADING EARNINGS SPELL CYCLE'S END, SAYS MORGAN STANLEY (1215 EDT/1615 GMT) The tug of war between bears and bulls has left the S&P 500 largely in place over the last year. Don't expect a rebound, says Michael Wilson, equity strategist at Morgan Stanley. "We are moving from the perception that this is late cycle to end of cycle," he wrote in a note on Monday. The benchmark S&P 500 index has performed as a defensive play, in Wilson's view, as investors have turned to shares of high-quality companies with solid earnings and clean balance sheets. Growth stocks and defensive stocks have taken turns leading the market upward this year, with a recent interlude from cyclical stocks. But Wilson expects that defensive shares will carry the torch going forward as U.S. economic growth declines. Wilson expects 2020 earnings estimates to be slashed to reflect the fall in momentum. So far, he says, those estimates haven't budged because companies haven't provided guidance that far out. Several analysts have put forth the view that earnings growth is set to rebound beginning in the fourth quarter of this year. But "this is the time of the year when companies may have to give up any further expectation of a rebound for the year if it has not emerged yet," Wilson says. And to prevent further disappointment, some companies will begin to "lower the bar" for 2020. Estimates for small- and mid-cap companies have already begun to come down, and large caps will follow suit, in Wilson's view. The decline in earnings growth will as a result put pressure on the S&P 500, Wilson opines. In addition to turning to defensives, he recommends shorting semiconductor shares, which he sees as especially vulnerable to downward earnings revisions. (April Joyner) ***** DESPITE HEADWINDS, MULTI-CLASS IPOs STILL COMING TO MARKET (1115 EDT/1515 GMT) A company planning on going public with a multi-class share structure is likely to face increasing headwinds as the focus for corporate governance shifts from "shareholders" to "stakeholders," according to a Goldman Sachs research note. In a statement signed by 181 CEOs last month, the Business Roundtable urged a shift away from "shareholder primacy" to broaden their commitment to all stakeholders, including customers, employees, suppliers and communities. The push for egalitarianism has already led to a reconsideration of voting rights among shareholders. In 2017, S&P Dow Jones announced it would no longer include companies with multiple share classes in its indexes, though existing constituents with multi-class structures are grandfathered in. The same year, FTSE Russell said companies with unequal voting rights would face additional scrutiny before inclusion. What's more "one share, one vote" governance is preferred by the Council of Institutional Investors, which represents $40 trillion of assets under management. But 17% of companies debuting in the public marketplace this year, accounting for 36% of proceeds raised year-to-date, still opted for multi-class voting structures. Why? Because it shields the C-suite from activist investors, allowing them to focus on long-term objectives, writes lead analyst David Kostin. Indeed, per Kostin, the 36 constituents of the S&P 500 with multi-class structures have outperformed the broader index, delivering an average 22% year-to-date return compared to the index's 18%. And according to Kostin, multi-class IPOs completed since July 2016 with a market cap over $1 billion have delivered a 50% year-to-date return, on average. Roku Inc and Snap Inc lead the pack, with their share prices having more than tripled. But long-term, the benefits of a multi-class structure are debatable, Kostin writes. Exclusion from the indexes means exclusion from passively-managed, index-objective ETFs, which now account for more than half of all U.S. mutual fund and ETF assets. (Stephen Culp) ***** DOW INDUSTRIALS: THERE'S STILL A THRUST ISSUE (0915 EDT/1315 GMT) With one trading day to go in September, the Dow Jones Industrial Average has risen close to 1.6% for the month. Thus, it appears September is not going to live up to its reputation as the worst month of the year. That said, with a longer-term momentum divergence still in place, the blue-chip average is not necessarily out of the woods for the rest of 2019. (Click on chart below.) Of note, the monthly RSI established an all-time high in January 2018. And despite higher DJI monthly closes since, the momentum study is maintaining a pattern of lower highs. Indeed, waning momentum warns that the Dow's advance is on less than firm footing. Therefore, a break of September's 25.978.22 low may suggest an intensifying downside turn. Such a turn would put at risk major support at the June trough (24,680.57), the log-scale support line from 2009 (at about 24,500 in October) and the 36-month moving average (which will rise to roughly 23,975 in October). The Dow will need to rally above its July high 23,798.68 and the resistance line across its 2018 tops (at about 27,450 in October) to suggest a bullish breakout. The resistance from the 2000 high will be at about 28,800 in October. That said, the longer-term momentum issue will likely remain a concern. (Terence Gabriel) *****