By Chris Matthews, MarketWatch , Sunny Oh

Netflix shares rally after third-quarter results

Stocks on Wall Street edged higher Thursday, with a tentative Brexit deal between the U.K. and European Union seen reducing risk, and third-quarter U.S. earnings reports from market heavy weights such as Netflix, Morgan Stanley providing support.

The new Brexit pact, hailed by European Commission President Jean-Claude Juncker and British Prime Minister Boris Johnson must still be approved by the U.K. parliament and other EU member states. Johnson has called for a U.K. parliamentary vote on Saturday.

Read:EU and U.K. leaders say Brexit deal has been agreed (http://www.marketwatch.com/story/eu-and-uk-leaders-say-brexit-deal-has-been-agreed-2019-10-17)

What are major indexes doing?

The Dow Jones Industrial Average rose 63 points, or 0.2%, to 27,065, while the S&P 500 index advanced 12 points, or 0.4%, to 3,001. The Nasdaq Composite index gained 36 points, or 0.4%, to 8,160.

Stocks ended with small losses (http://www.marketwatch.com/story/stock-futures-point-slightly-lower-as-worries-remain-over-us-china-deal-2019-10-16) in a range-bound session on Wednesday. The Dow lost 22.82 points, or 0.1%, to close at 27,001.98, while the S&P 500 gave up 5.99 points, or 0.2%, to end at 2,989.69. The Nasdaq Composite finished at 8,124.18, off 24.52 points, or 0.3%.

What's driving the market?

The Brexit headlines sent the British pound higher and also lifted European stocks (http://www.marketwatch.com/story/mixed-corporate-results-from-nestle-and-unilever-keep-european-stocks-to-a-tight-range-2019-10-17), though analysts cautioned that the agreement could still be derailed. Northern Ireland's Democratic Unionist Party, a key ally of U.K. Prime Minister Boris Johnson's Conservative Party, said it remained opposed to the draft agreement.

See: What a Brexit deal would mean for U.S. stocks and global investors (http://www.marketwatch.com/story/what-a-brexit-deal-would-mean-for-us-stocks-and-global-investors-2019-10-17)

"It remains to be seen whether the reaction is short-lived as the politicians go toe-to-toe again at the weekend, but in the meantime the very possibility of an agreed outcome to the painful Brexit saga has resulted in a relief rally, both financial and psychological," said Richard Hunter, head of markets at Interactive Investor.

Meanwhile, U.S. stocks have reacted positively overall to the start of third-quarter earnings reporting season.

"Even though it is very early in the Q3 earnings reporting period, investors have been encouraged by the better-than-expected results for the large diversified banks and selected health care companies," said Sam Stovall, chief investment strategist at CFRA, in a note.

Overall, the U.S corporate earnings season is off to a good start. More than 78% of the S&P 500 index companies that have reported so far have topped analyst earnings expectations, according to FactSet.

Investors were igesting a series of downbeat U.S. economic reports though. The number of unemployed workers who applied for jobless benefits (http://www.marketwatch.com/story/jobless-claims-rise-slightly-to-214000-in-mid-october-but-remain-near-a-50-year-low-2019-10-17)in the second week of October rose slightly, but layoffs nationwide remained near a 50-year low and showed no sign of rising despite a slowdown in the U.S. economy.

U.S. new home construction fell 9% in September (http://www.marketwatch.com/story/housing-starts-fall-9-in-september-but-high-permits-low-mortgage-rates-suggest-construction-slowdown-is-temporary-2019-10-17) from the month before, while permits for new housing construction were issued at a rate of 1.39 million homes, a 3% decline and below the 1.38 million consensus expectations.

Industrial production fell 0.4% in September (http://www.marketwatch.com/story/industrial-output-falls-by-most-in-five-months-pushed-lower-by-gm-strike-2019-10-17), the largest one-month drop since April. Industrial capacity usage slumped to 77.5 in September from 77.9 in the prior month. An index of manufacturing activity (http://www.marketwatch.com/story/philly-fed-manufacturing-index-stumbles-in-october-2019-10-17) in Pennsylvania, Delaware and New Jersey fell to 5.6 in September from 12.0 in August, below the 7.1 expected, according to Econoday.

Uncertainty around U.S.-China trade talks also continues to cast a cloud over the market. A Chinese Ministry of Commerce spokesman said U.S. and Chinese negotiators are still working out the text of a so-called "phase 1" trade agreement that led to the U.S. postponing a tariff increase that had been set for Tuesday this week in exchange for promises by the Chinese to increase U.S. agricultural purchases. The White House said that the deal would involve agricultural purchases of between $40 to $50 billion annually, but Gao declined to confirm that number, according to Bloomberg (https://www.bloomberg.com/news/articles/2019-10-17/china-says-trade-team-in-close-contact-with-u-s-on-deal-text).

White House economic adviser Larry Kudlow said Thursday (http://www.marketwatch.com/story/kudlow-says-us-china-have-come-further-than-ever-on-trade-deal-2019-10-17) that the U.S. and China have come "further than we ever have before" on a trade deal, in an interview with CNBC, noting that the two sides have seen momentum in reason like financial services and currency management.

"The chatter out of Washington and Beijing has been positive, so the odds of a phase one pact being signed next month at the G7 summit is high," said Jerry Lucas, senior trading strategist at UBS Global Wealth Management. "With that and Brexit progress, the world is looking like a better place than two weeks ago."

T (http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17)he White House announced the G-7 summit (http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17) (http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17)would take place at Trump's resort in Miami.

New York Fed President John Williams is due to deliver a speech and take part in a discussion in Manhattan at 4:20 p.m.

Overall though, investors remain wary as October has recorded nearly 40% higher volatility than the other 11 months since World War Two, Sam Stovall, chief investment strategist at CFRA, said in a note. CFRA still expects to see share prices end the year higher on an improvement in earnings per share expectations, he added.

What companies are in focus?

Morgan Stanley(MS) shares rose Thursday after the investment bank reported third-quarter profits and sales that beat Wall Street expectations.

Shares of Honeywell International Inc.(HON) were up after its third-quarter results topped Wall Street forecasts (http://www.marketwatch.com/story/honeywells-stock-drops-after-profit-beat-and-guidance-raised-but-sales-fall-shy-2019-10-17).

Philip Morris International Inc.(PM), also reported third-quarter results Thursday (http://www.marketwatch.com/story/philip-morris-profit-tops-estimates-in-q3-but-sales-fall-short-lowers-full-year-eps-guidance-2019-10-17), announcing that earnings fell less than analysts had anticipated, though revenue rose less than expected.

Shares of Netflix Inc.(NFLX) were higher Thursday after it reported third-quarter results (http://www.marketwatch.com/story/netflix-stock-spikes-after-subscriber-growth-bounces-back-but-executives-admit-competition-will-hurt-the-rest-of-the-year-2019-10-16) late Wednesday. The streaming service said it added 6.77 million new paying subscribers in the quarter, with only 500,000 coming from the U.S.

Opinion:Netflix finally admits the obvious: Competition from Apple and Disney will hurt (http://www.marketwatch.com/story/netflix-finally-admits-the-obvious-competition-from-apple-and-disney-will-hurt-2019-10-16)

Shares of International Business Machine Inc.(IBM) tumbled though after it reported less revenue than Wall Street expected (http://www.marketwatch.com/story/ibm-stock-slips-after-revenue-misses-street-view-2019-10-16) after Wednesday's closing bell.

Rail-based freight company CSX Corp. (CSX) also reported earnings after the close of trade Wednesday. Third-quarter profits unexpectedly rose and revenue fell in line with analyst forecasts.

How are other markets trading?

The yield on the 10-year U.S. Treasury note was up about a basis point at (http://www.marketwatch.com/story/treasury-yields-climb-after-uk-strikes-tentative-brexit-deal-with-eu-2019-10-17)1.76%.

European stocks ended little changed after rising initially following the news of a tentative Brexit deal, with the FTSE up 0.2% and the Stoxx Europe 600 off 0.1% at 393.08.

Oil futures finished higher Thursday, as the U.S. and Turkey reached a cease-fire pact in Syria, temporarily easing Middle East tensions, and a tentative Brexit deal fueled appetite for assets perceived as risk, despite a rise in U.S. crude inventories. (http://www.marketwatch.com/story/oil-lower-on-fears-of-us-crude-inventory-rise-2019-10-17)West Texas Intermediate crude for November delivery gained 57 cents to $53.93 a barrel.

Gold prices ended at the highest price in a week, (http://www.marketwatch.com/story/gold-prices-bounce-around-as-investors-weigh-tentative-brexit-pact-2019-10-17)up $4.30 at $1,498.30 an ounce on Comex and the U.S. dollar fell 0.4%, according to the ICE U.S. dollar index .

(END) Dow Jones Newswires

October 17, 2019 15:37 ET (19:37 GMT)

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