By Chris Matthews and Mark DeCambre, MarketWatch
Morgan Stanley revenue falls 10.5%
U.S. stocks ticked lower Thursday morning, 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?
The Dow Jones Industrial Average fell 41 points, or 0.2%, to
24,163, while the S&P 500 index retreated 4 points to 2,612, a
decline of about 0.1%. The Nasdaq Composite Index ebbed 12 points
lower at 7,022, a fall of 0.1%.
What's driving the market?
Wall Street remains focused on bank performance, and futures
markets took a turn for the worse 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).
Chief Executive Officer James Gorman reassured investors, however,
that "We do not believe the fourth quarter is the new normal,"
while adding that the bank's performance in the first quarter of
2019 has already begun to rebound.
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
(http://www.marketwatch.com/story/feds-launch-criminal-probe-into-huawei-over-alleged-trade-theft-2019-01-16)
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 administration's 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?
The number of Americans newly applying for unemployment benefits
(http://www.marketwatch.com/story/jobless-claims-fall-but-more-federal-workers-seek-aid-as-government-shutdown-drags-on-2019-01-17)
fell in the week ending Jan. 12, to 213,000 from 216,000 the week
prior. Economists polled by MarketWatch had expected a reading of
220,000.
The Federal Reserve Bank of Philadelphia's manufacturing index
rose to 17.0 in
(http://www.marketwatch.com/story/philadelphia-fed-manufacturing-index-rebounds-in-january-2019-01-17)January,
up from 9.1 in December, the bank reported Thursday. The index
reflects 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 fell 5.2% early Thursday
Signet Jewelers Ltd. (SIG) stock was down 20%, after retailer
cut guidance for its fourth quarter and fiscal 2019 and said its
holiday performance fell short of expectations.
Amazon.com Inc. (AMZN) shares were in focus after a report from
Consumer Intelligence Research Partners Inc
(http://www.marketwatch.com/story/amazon-prime-membership-exceeds-100-million-2019-01-17).
that Amazon prime membership has reached 101 million members.
Shares are up 0.1% early Thursday.
Shares of PPP Industries, Inc. (PPG) were up 2%, after the
company issued a downbeat outlook
(http://www.marketwatch.com/story/ppg-beats-profit-expectations-but-gives-downbeat-outlook-2019-01-17).
How did the benchmarks fare yesterday?
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.
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 0.4% and the FTSE 100 down 0.7%.
Crude oil was on the retreat Thursday, down 1.4%, while gold is
down 0.3% and the U.S. dollar was virtually unchanged.
(END) Dow Jones Newswires
January 17, 2019 09:56 ET (14:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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