UKX FTSE 100 Index

By Chris Matthews and Mark DeCambre, MarketWatch

Morgan Stanley revenue falls 10.5%

U.S. stock-index futures headed lower Thursday, putting the indexes in position to end a two-day rise as investors digested quarterly earnings results and watched for impact from a nearly one-month partial shutdown of the government.

How are benchmarks faring?

Futures for the Dow Jones Industrial Average were trading off 98 points, or 0.4%, at 24,051, while S&P 500 index futures were off 10.45 points at 2,602.75, a decline of about 0.4%. Nasdaq-100 futures were 23 points lower at 6,643, a fall of 0.4%.

On Wednesday, the Dow rose 141.57 points, or 0.6%, to 24,207.16, while the S&P 500 index climbed 5.80 points, or 0.2%, to 2,616.10. The Nasdaq Composite Index advanced 10.86 points, 0.2%, to 7,034.69.

What's driving the market?

Wall Street took its early cues from weakness in European banks, and futures markets deepened their losses after Morgan Stanley(MS) announced earnings and revenue that fell short of analyst expectations (http://www.marketwatch.com/story/morgan-stanley-snaps-3-year-streak-of-earnings-beats-2019-01-17). Investors will be focused on management commentary due later Thursday morning, for executives thoughts on the state of the U.S. and global economies.

The news follows a warning by French bank (http://www.marketwatch.com/story/societe-generale-4q-hit-by-challenging-environment-2019-01-17) Société Générale (GLE.FR) that its fourth-quarter revenue would fall roughly 20%, due to the challenging environment in global capital markets.

Also weighing on markets was news reported late Wednesday that federal prosecutors have launched a criminal investigation of China's Huawei Technologies Co. for allegedly stealing trade secrets from American corporations it does business with. The news raised fears that broader tensions between the U.S. and China would prevent a trade deal to avoid the Trump Administrations planned increase in tariffs on a range of imports from 10% to 25%, scheduled for March 1.

Meanwhile, investors were increasingly worried that a government shutdown entering its 27th day would deliver a more lasting impact to economic growth in the first quarter, with no end in sight for the partial closure.

Read:Why stock-market investors may soon need to worry about the government shutdown (http://www.marketwatch.com/story/why-stock-market-investors-are-starting-to-worry-about-the-government-shutdown-2019-01-16)

Separately, investors awaited the next steps for Britain after Theresa May's government narrowly survived a no-confidence vote Wednesday (http://www.marketwatch.com/story/brexit-brief-prime-minister-in-search-of-plan-b-after-surviving-no-confidence-vote-2019-01-17) as she attempts to forge a path forward for the U.K. exit from the European Union.

What are the strategists saying?

Investors remained focused on bank earnings this week, and what the numbers and management commentary say about the broader U.S. economy, Tom Essaye, president of the Sevens Report wrote in a Thursday note to clients.

Commentary from banks executives has been "better than feared," he wrote.

"The numbers themselves are OK, but not great, while the commentary is reassuring, but not overtly optimistic," Essaye argued. "Given very low expectations [for the financial sector] heading into this earnings season, the better-than-feared result is helping markets rally, but it's not enough to cause a material move higher in stocks through what we think is the higher end of the current range (2720ish)."

What data and speakers are ahead?

Investors will get a snapshot of the U.S. labor market when the Labor Department releases its estimate of the number of Americans newly seeking unemployment benefits at 8:30 a.m. Eastern Time.

At the same time, The Federal Reserve Bank of Philadelphia will release its index measuring the health of the manufacturing sector in Pennsylvania, Delaware and New Jersey.

At 10:30 a.m., Federal Reserve Gov. Randal Quarles will give a speech on insurance regulation and supervision in New York City.

Which stocks are in focus?

Shares of Morgan Stanley were down 5.2% in premarket trade.

How are other markets trading?

Markets in Asia traded lower, with Japan's Nikkei , China's Shanghai Composite Index , and Hong Kong's Hang Seng all losing ground Wednesday.

In Europe, markets were also in the red, with the Stoxx 600 Europe shedding 0.3% and the FTSE 100 down 0.7%.

Crude oil was on the retreat Thursday, down 2%, while gold and the U.S. dollar were virtually unchanged.

(END) Dow Jones Newswires

January 17, 2019 08:17 ET (13:17 GMT)

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