By Mark DeCambre and Anora M. Gaudiano, MarketWatch

Morgan Stanley shares rally by 3.5% after upbeat profits

U.S. stocks traded mixed, with the Dow Jones Industrial Average inching up, but the broader market edged lower as a slump in the energy sector weighed.

Wall Street digested a second day of congressional testimony from Federal Reserve Chairman Jerome Powell amid lackluster data in housing, which was offsetting corporate earnings that have thus far come in better than expected.

What are markets doing?

The S&P 500 was down about 2 points, or less than 0.1%, at 2,807, with six of its 11 main sectors trading lower. Gains in the financials and industrials sectors, up 0.9% and 0.6%, respectively, were overshadowed by sharp losses in energy shares, down more than 1.2%.

The Nasdaq Composite Index declined by 26 points, or 0.3%, to 7,829, a day after notching its third all-time high of the month.

The Dow advanced by about 20 points, or 0.1%, to 25,140. If the blue-chip benchmark closes up a fifth day in a row in the green, it would mark its longest wining period since the eight-day period ended May 14, according to FactSet data.

What is driving the market?

Wall Street moves has been influenced by economic reports and earnings reports. So far, 88% of the 41 S&P 500 companies that have reported at this point have beaten profit forecasts, setting the tone for an positive season of quarterly results.

On Tuesday, Wall Street investors keyed in on Powell's appearance before the Senate Banking Committee, where he offered a sanguine outlook for the U.S. economy and indicated interest rates will continue to go up every three months "for now." (http://www.marketwatch.com/story/powell-says-the-best-path-is-continued-gradual-interest-rate-hikes-2018-07-17)

The central bank chief acknowledged that global trade wars and fiscal policy were areas of uncertainty that may give the central bank pause in its path toward normalizing rates. The statement appeared to provide some comfort for investors that the Fed would be cognizant of not disrupting the strength of the economy.

The Fed Chairman Powell is presently delivering his semiannual testimony to the House Financial Services Committee at 10 a.m. Eastern Time.

What are strategists saying?

"Earnings reports so far have been solid and despite today's disappointing housing starts, economic data have also been trending higher, providing support for markets," said Quincy Krosby, chief market strategist, at Prudential Financial.

"Investors were also relieved to hear that the Fed is not oblivious to the impact of potential trade war," Krosby added.

What's on the economic calendar?

Housing starts (http://www.marketwatch.com/story/housing-starts-tumble-as-market-headwinds-crush-momentum-2018-07-18)in June dropped by 12.3% from lowered numbers in May and were 3% lower than year-ago levels.

The Fed's Beige Book is due at 2 p.m. Eastern.

Separately, Larry Kudlow (http://www.marketwatch.com/story/kudlow-says-more-pro-growth-measures-on-horizon-sees-gdp-growth-around-4-2018-07-18), economic adviser to President Donald Trump, said additional pro-growth measures could be coming soon, which could deliver a further jolt to the U.S. economy.

Which stocks are in focus?

Morgan Stanley(MS) shares rallied 3.5% after the investment bank reported second-quarter earnings and revenue that rose above expectations, boosted by outperformance in its sales and trading business.

Alphabet Inc.(GOOGL) shares were slightly higher, even after reports the European Union's competition body hit Google with its biggest-ever antitrust fine (http://www.marketwatch.com/story/eu-set-to-slap-google-with-biggest-ever-antitrust-fine-of-5-billion-2018-07-18) of $5 billion over Android apps.

U.S.-listed shares of Ericsson(ERIC-B.SK) jumped 7.5% after the Swedish telecom equipment maker said it swung to a an operating profit in the second quarter (http://www.marketwatch.com/story/ericsson-losses-widen-amid-overhaul-rd-spending-2018-07-18).

Shares of United Continental Holdings Inc.(UAL) were up 5.8% after the airline reported better-than-expected second-quarter earnings late Tuesday and lifted its profit projections (http://www.marketwatch.com/story/united-shares-higher-on-earnings-beat-upped-2018-guidance-2018-07-17).

Abbott Laboratories(ABT) shares rose 2.8% after the company reported second-quarter profit and revenue beats.

After the market closes, American Express Co.(AXP), IBM Corp.(IBM) and eBay Inc.(EBAY) are slated to release results.

Target Corp. shares (TGT) rose 0.1% after the retailer said it had the biggest day for online traffic (http://www.marketwatch.com/story/target-shares-get-a-premarket-lift-after-reporting-biggest-online-sales-day-of-2018-2018-07-18) and sales of 2018. Target hosted a one-day promotional event on July 17, overlapping with Amazon.com Inc.'s (AMZN) Prime Day event, which encountered technical snafus early in its sales period beginning on Monday. Shares of Amazon were up about 0.2%.

Check out:IBM earnings: Security is growing fast, but is it enough money to matter? (http://www.marketwatch.com/story/ibm-earnings-security-is-growing-fast-but-is-it-enough-money-to-matter-2018-07-13)

What are other markets doing?

Asian stock markets closed mixed, with Japan's Nikkei 225 index ending 0.4% higher, but Chinese and Hong Kong markets falling. European stocks were mostly higher.

Oil prices resumed their selloff, with West Texas Intermediate crude down 0.6% at $67.66 a barrel. Gold was also lower, trading off 0.2% to $1,224 an ounce. The dollar as gauged by the ICE Dollar a measure of six rival currencies, was up 0.3% at 95.233.

--Sara Sjolin contributed to this article

(END) Dow Jones Newswires

July 18, 2018 10:24 ET (14:24 GMT)

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