By Chris Matthews and Mark DeCambre, MarketWatch
Fourth-quarter corporate results have thus far inspired
confidence
U.S. stocks rose early Wednesday, as investors digested mostly
positive earnings from financial institutions like Bank of America
and Goldman Sachs.
Meanwhile, Wall Street continues to battle uncertainty driven by
a partial government shutdown entering its 26th day and drama in
the U.K. related to its tumultuous attempts at negotiating an
orderly divorce from the European Union.
How are major benchmarks performing?
The Dow Jones Industrial Average rose 160 points, or 0.7%, at
24,225, the S&P 500 index climbed 13 points, or 0.5%, at 2,623,
while The Nasdaq Composite Index advanced 55 points to 7,078, a
gain of 0.8%.
What's driving the market?
Wall Street investors are cheering fourth-quarter results from
Bank of America Corp. (BAC)reflected healthy demand for loans even
as interest rates rise, while also taking solace in quarterly
results from Goldman Sachs Group Inc.(GS), which produced earnings
and profits that topped expectations on the back of healthy mergers
and acquisitions.
In the early innings of fourth-quarter earnings season,
management guidance has communicated their confidence in domestic
expansion, if not in global economic growth, which has been showing
cracks. That trend continued Wednesday, after B. of A.'s C.E.O.
said in a statement accompanying the earnings release that "we see
a healthy consumer and business climate driving a solid
economy."
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 EU without disrupting global markets. May is expected to
survive the late-Wednesday vote.
Investors will also continue to weigh 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.
Which stocks are in focus?
B. of A.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. The
bank reported earnings per share, or EPS, of 70 cents, compared
with consensus for 63 cents. The stock is up 5.4% Wednesday.
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).
The stock is up 39% early 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 1.2% at 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. Nevertheless, the stock is up 4.2%.
Shares of Fiserv Inc. (FISV) are down 8% Wednesday, 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 16.3%.
Shares of Goldman were rising 5% early Wednesday, after the
investment bank delivered sales and profits in the fourth quarter
that were better than expected.
Nordstrom Inc. (JWN) stock is down 6.8% 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.
Shares Charles Schwab Corp.(SCHW)are up 2% Wednesday, after the
brokerage beat Wall Street estimates for earning and revenue in the
fourth quarter.
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?
The cost of imported goods fell for the second month in a row,
declining by 1% in December, the Labor Department reported
Wednesday morning
(http://www.marketwatch.com/story/the-us-is-no-longer-importing-inflation-price-gauge-shows-2019-01-16).
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 0.6%, while the U.K's FTSE 100 fell 0.4%.
Crude oil prices were on the retreat Wednesday morning, down
0.2% to $52.03 per barrel, while the price of gold rose and the
U.S. dollar was virtually unchanged.
(END) Dow Jones Newswires
January 16, 2019 10:13 ET (15:13 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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