By Sara Sjolin, MarketWatch , Ryan Vlastelica

Travelers falls after results, but IBM rallies

U.S. stocks fell in midday trading on Thursday, as major indexes consolidated their gains after a five-day rally that was driven largely by optimism over the strength of corporate earnings.

What are markets doing?

The Dow Jones Industrial Average was down 0.2%, or 61 points, to 25,138. The blue-chip average is coming off its longest winning streak in two months (http://www.marketwatch.com/story/us-stock-futures-fight-for-direction-with-powell-morgan-stanley-earnings-ahead-2018-07-18). The S&P 500 slipped 5 points to 2,810, a 0.2% decline. The Nasdaq Composite Index fell 9 points, or 0.1%, to 7,846.

At current levels, the S&P is about 2.2% below its own record, while the Dow is 5.6% under its own.

What is driving the market?

The muted action on Thursday came as traders absorbed recent market-moving events, including Federal Reserve Chairman Jerome Powell's two-day congressional testimony, upbeat economic data and a raft of largely positive earnings.

The earnings season continued at full speed on Thursday, with Dow component Travelers Cos. Inc.(TRV) among the high-profile names that have reported.

But worries about a potential trade war remained after President Donald Trump threatened (http://www.marketwatch.com/story/trump-threatens-eu-with-tremendous-retribution-via-auto-tariffs-2018-07-19) "tremendous retribution" against the European Union on Wednesday, specifically mentioning auto tariffs, if his meeting with EU officials next week doesn't yield what he considers a fair auto trade deal.

Don't miss:Trade tariffs mean companies will spend less on growing their business in 2019, says Fitch (http://www.marketwatch.com/story/trade-tariffs-mean-companies-will-spend-less-on-growing-their-business-in-2019-says-fitch-2018-07-19)

What's on the economic calendar?

Initial jobless claims fell by 8,000 last week, dropping to their lowest level since late 1969 (http://www.marketwatch.com/story/jobless-claims-sink-to-lowest-level-since-end-of-1969-2018-07-19). Separately, the Philly Fed manufacturing index rose 6 points to a reading of 25.7 in July, above expectations (http://www.marketwatch.com/story/philly-fed-index-improves-to-a-reading-of-257-in-july-2018-07-19).

What are strategists saying?

"Earnings so far have been fantastic. The numbers are great, and that's why the market shouldn't take any sharp step down. Valuations make stocks very attractive, and the economy is doing well--just look at the jobless numbers," said Wayne Kaufman, chief market analyst at Phoenix Financial Services, a broker-dealer.

"The biggest thing holding the market up is fears over a trade war. The rhetoric has been heated, which is scaring buyers away."

Stock movers

Travelers fell 3.1% after the insurer reported second-quarter earnings that missed expectations (http://www.marketwatch.com/story/travelers-stock-set-to-fall-after-surprise-earnings-decline-offset-revenue-beat-2018-07-19). The stock was one of the biggest percentage decliners on the Dow, and contributed to outsize losses in the financial sector, which lost 1.2% as the worst-performing industry of the day.

IBM Corp.(IBM) traded 3.1% higher after the tech giant's earnings out late Wednesday topped Wall Street estimates (http://www.marketwatch.com/story/ibm-stock-ticks-higher-as-mainframe-gains-fuel-earnings-beat-2018-07-18).

Nearly 14% of S&P 500 companies have reported thus far this season, according to FactSet, with profits up more than 20% and sales growing about 8.4%.

Philip Morris International Inc.(PM) lost 3.4% after it gave a full-year profit outlook that was below analyst expectations (http://www.marketwatch.com/story/philip-morris-shares-lift-on-q1-profit-revenue-beats-2018-07-19). The tobacco giant has slumped about 25% thus far this year.

Domino's Pizza Inc.(DPZ) lost 1.9% after the restaurant chain reported second-quarter revenue and same-store sales that missed expectations (http://www.marketwatch.com/story/dominos-shares-sink-after-revenue-and-same-store-sales-miss-2018-07-19). Nevertheless, Domino's has been a strong performer in 2018, up nearly 50% thus far this year.

Bank of New York Mellon (BK) fell 5.7%. The company reported second-quarter earnings that were slightly ahead of expectations (http://www.marketwatch.com/story/bank-of-new-york-mellon-profit-climbs-14-2018-07-19), and revenue that met forecasts.

Capital One Financial Corp.(COF), Microsoft Corp.(MSFT) and Intuitive Surgical Inc.(ISRG) were slated to report after the close.

Comcast Corp. (CMCSA) rose 3.2% after it said it would not pursue the acquisition (http://www.marketwatch.com/story/comcast-drops-bid-for-21st-century-fox-assets-leaving-disney-in-the-clear-2018-07-19) of assets from 21st Century Fox (FOXA), instead focusing its attention on Sky. This leaves the field clear for the Walt Disney Company (DIS) which last month won the Justice Department's approval for a Fox deal. Shares of Fox lost 1.5% while Disney rose 3.2%.

Tesla Inc.(TSLA) fell 2.3% after Needham analyst Rajvindra Gill downgraded the stock to underperform (http://www.marketwatch.com/story/tesla-stock-falls-after-needham-downgrades-to-underperform-2018-07-19).

Shares of eBay Inc.(EBAY) fell 7.7% after the company late Wednesday reported an earnings beat but issued weaker-than-expected guidance (http://www.marketwatch.com/story/ebay-stock-falls-after-earnings-beat-weak-guidance-2018-07-18).

Amazon.com Inc.'s (AMZN) top cloud-computing executive has officially denied (http://www.marketwatch.com/story/exclusive-amazon-denies-it-will-challenge-cisco-with-switch-sales-2018-07-18) that Amazon Web Services plans to start selling network switches to other businesses. The news could support networking companies like Cisco Systems Inc. (CSCO), which recently fell on the prospect of a new competitor undercutting them on price. Shares of Cisco rose 0.9%.

Mersana Therapeutics Inc.(MRSN) tumbled 34% after the Food and Drug Administration placed a cancer-drug trial on hold (http://www.marketwatch.com/story/mersana-therapeutics-cancer-trial-placed-on-partial-clinical-hold-by-fda-after-patient-death-2018-07-19) following a patient death.

What are other markets doing?

Stocks in Asia closed lower (http://www.marketwatch.com/story/most-asian-stocks-rise-with-nikkei-on-track-for-five-day-winning-streak-2018-07-18), with European markets mostly matching the downbeat mood.

U.K. stocks , however, bucked the negative trend (http://www.marketwatch.com/story/ftse-100-holds-steady-as-traders-focus-on-retail-sales-data-2018-07-19) after British retail sales data missed expectations and sent the pound sharply lower.

The ICE U.S. Dollar index climbed 0.3% to 95.353.

Oil prices rebounded sharply after Saudi Arabia said it expects to see a drop in August exports, while gold prices slumped in reaction to a stronger dollar.

(END) Dow Jones Newswires

July 19, 2018 12:16 ET (16:16 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.