By Mark DeCambre, MarketWatch

Brexit plan remains on Wall Street's radar with a 'no confidence' vote in May's government set for later Wednesday

U.S. stocks were set to see muted action on Wednesday as a partial government shutdown enters its 26th day, and as uncertainty in U.K. politics adds to questions about the stability of European markets.

Wall Street, meanwhile, was digesting a fresh batch of earnings from financial institutions, including BlackRock Inc., and Bank of America, among others.

How are major benchmarks performing?

Futures for the Dow Jones Industrial Average were up 82 points, or 0.4%, at 24,065, those for the S&P 500 index climbed 6.35 points, or 0.2%, at 2,612, while Nasdaq-100 futures rose 9.75 points to 6,686.50, a gain of 0.2%.

On Tuesday, the Dow rose 155.75 points, or 0.7%, to 24,065.59. The S&P 500 index gained 27.69 points, or 1.1%, to 2,610.30, its first close above 2,600 since Dec. 13. Analysts have suggested that if the large-cap index manages to secure a foothold above 2,600, it is a sign that the market has successfully digested the bulk of the selling pressure that contributed to a sharp December selloff for equities.

The Nasdaq Composite Index advanced 117.92 points, or 1.7%, to 7,023.83, closing above the key 7,000-mark for the first time since Dec. 13.

What's driving the market?

Wall Street investors will continue to assess quarterly results, which have mostly been strong, and guidance from the chief executives of American corporations, who have thus far communicated their confidence in domestic expansion, if not in global economic growth, which has been showing cracks.

Traders are also taking solace in a move (https://www.reuters.com/article/us-china-economy/china-central-banks-record-83-billion-injection-heightens-worries-over-ailing-economy-idUSKCN1PA0UW) by the People's Bank of China to inject a record $83 billion into the country's financial system Wednesday, as the government tries to blunt the economic slowdown that threatens to damage the European and U.S. economies as well.

Also in focus on Wednesday was a U.K. parliamentary vote of no confidence in Prime Minister Theresa May's government, set to take place at around 2 p.m. Eastern Time, after the British leader suffered an overwhelming rejection of her proposed Brexit deal late Tuesday. The defeat, 432 against compared with 202 in favor, was the largest margin of defeat by a sitting British government since the 1920s, and throws into doubt the country's plans to exit from the European Union in orderly fashion, without disrupting global markets. May is expected to survive the late-Wednesday vote.

Investors will also continue to weight the implications of a protracted, partial government shutdown, which has now stretched to a record 26th day. While markets have largely shrugged off the drama unfolding in Washington, economists warn that the longer the impasse lasts, the greater the effect on the economy will be, with Trump administration economists now estimating (http://www.marketwatch.com/story/white-house-doubles-estimated-of-shutdown-impact-on-gdp-cnbc-2019-01-15) that gross domestic product in the first quarter will be reduced by 0.1% each week the shutdown drags on.

The most immediate impact for markets is the continued interruption of the flow of government-produced economic data. Retail sales figures for December and data on business inventories for November, set to be released Wednesday, will be delayed, as will housing starts and building permits data, initially scheduled to be released on Thursday.

Which stocks are in focus?

Bank of America Corp. (BAC)reported revenue and profit (http://www.marketwatch.com/story/bank-of-america-profit-tops-estimates-2019-01-16) that were better than average analysts' estimates from FactSet. B. of A. reported earnings per share, or EPS, of 70 cents, compared with consensus for 63 cents. The stock is up 3.4% in premarket trade.

Sears Holdings Corp. (SHLDQ) shares are in focus, after Chairman Eddie Lampert prevailed in a bankruptcy auction for the struggling department store chain with an improved takeover bid of roughly $5.2 billion, according to reports (http://www.marketwatch.com/story/sears-chairman-eddie-lampert-prevails-with-strengthened-bid-in-bankruptcy-auction-reuters-2019-01-16). Shares weren't traded before the market open Wednesday.

Ford Motor Co. (F)said it expects adjusted earnings per share (http://www.marketwatch.com/story/ford-reports-preliminary-2018-earnings-below-expectations-outlines-lineup-redesign-2019-01-16) of $1.30, compared with FactSet consensus of $1.33 a share. Shares are down 0.5% before the start of trade Wednesday.

BlackRock Inc.(BLK) reported quarterly results that were weaker than expected, with revenue totaling $3.434 billion in the fourth quarter, while analysts polled by Refinitiv expected sales to reach $3.516 billion. The stock is down 1.7% in premarket trade.

Shares of Fiserv Inc. (FISV) are down 8% in premarket action, after the company announced a deal to acquire First Data Corp. (FDC) in an all-stock deal worth $22 billion. First Data stock is up 17.7% before the start of trade Wednesday.

Shares of Goldman Sachs Group Inc.(GS) are rising 3.4% in premarket action, after the investment bank beat estimates for sales and profits in the fourth quarter.

Nordstrom Inc. (JWN) stock is down 9% in premarket trade, after the retailer said Tuesday evening (http://www.marketwatch.com/story/nordstrom-stock-falls-after-retailer-reported-holiday-sales-2019-01-15) that its full-year fiscal 2019 earnings would be at the low end of its previous guidance, citing weak holiday sales.

Looking ahead, Charles Schwab Corp.(SCHW). is expected to release fourth-quarter earnings before the bell Wednesday.

What are the strategists saying?

Mark Newton, independent market analyst at Newton Advisors, on Wednesday wrote that the "S&P [is] likely to face strong overhead resistance between 2630-40 between Wednesday-Friday of this week. Reversals of trend look likely technically, and one should consider using strength Wednesday to flatten out and/or adopt hedges for an above-average chance of a drawdown into next week."

What data are in focus?

At 8:30 a.m. Eastern Time, the Labor Department will release its estimate of import-price inflation.

At 10 a.m. the National Association of Home Builders will release its index measuring home builder confidence.

At 2 p.m., the Federal Reserve will release its beige book, featuring anecdotal information on current economic conditions in the U.S.

How are other markets trading?

In Asia, markets traded mixed, after disappointing data on machinery orders helped send the 0.6% lower. In Hong Kong, the Hang Seng Index rose 0.3%, while China's Shanghai Composite Index traded flat.

European markets traded mostly higher Wednesday, with the Stoxx Europe 600 rising 0.3%, while the U.K's FTSE 100 fell 0.5%.

Crude oil prices were on the retreat Wednesday morning, down 0.9% to $51.61 per barrel, while the price of gold was virtually unchanged. The U.S. dollar was up 0.1%.

 

(END) Dow Jones Newswires

January 16, 2019 08:18 ET (13:18 GMT)

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