By Sue Chang and Chris Matthews, MarketWatch
Morgan Stanley revenue falls 10.5%
Stocks extended their win streak to three days Thursday after
The Wall Street Journal reported that the Trump administration was
debating whether to ease tariffs on Chinese imports in a bid to
calm markets and ease tensions with Beijing.
How did the benchmarks fare?
The Dow Jones Industrial Average erased an earlier loss to rise
162.94 points, or 0.7%, to 24,370.10 in choppy trade. The blue-chip
gauge was up 267 points at its session high. The S&P 500 index
added 19.86 points, or 0.8%, to 2,635.96 and the Nasdaq Composite
Index gained 49.77 points, or 0.7%, to finish at 7,084.46.
What drove the market?
U.S. officials are considering lifting some tariffs on Chinese
products
(https://www.wsj.com/articles/u-s-weighs-lifting-china-tariffs-to-hasten-trade-deal-calm-markets-11547754006?)
in an effort to elicit more concessions from China for a bilateral
trade deal and to stabilize the financial markets, the Journal
reported.
However, the plan faces resistance from U.S. Trade
Representative Robert Lighthizer who doesn't want the U.S. to come
across as weak, the report said. A Treasury spokesman said that
neither Treasury Secretary Steven Mnuchin nor Lighthizer "have made
any recommendations to anyone with respect to tariffs or other
parts of the negotiation with China."
Aside from trade, investors focused on banking industry
performance after Morgan Stanley 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.
Read:Bank stocks are flying high in 2019, but here's why the
party might not last
(http://www.marketwatch.com/story/bank-stocks-are-flying-high-in-2019-but-heres-why-the-party-might-not-last-2019-01-17)
Morgan Stanley's underwhelming results follow 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.
The market's upside was capped in early action by news late
Wednesday that federal prosecutors have launched a criminal
investigation
(http://www.marketwatch.com/story/feds-launch-criminal-probe-into-huawei-over-alleged-trade-theft-2019-01-16)
into China's Huawei Technologies Co. for allegedly stealing trade
secrets from American corporations it does business with. The
development raised fears that broader tensions between the U.S. and
China would prevent a trade deal to stave off 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.
Read:Why investors are starting to pay attention to 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 the U.K. after
Theresa May's government narrowly survived a no-confidence vote
(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 country's exit from
the European Union.
On the economic front, 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
(http://www.marketwatch.com/story/philadelphia-fed-manufacturing-index-rebounds-in-january-2019-01-17)
in 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.
What were strategists saying?
"There are so many earnings reports yet to come, and that's why
you're not seeing more movement in the markets today," Tom Martin,
senior portfolio manager at Globalt Investments told
MarketWatch.
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 said in a 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)."
Which stocks were in focus?
Shares of Morgan Stanley(MS) fell 4.4% following release of
quarterly results.
Signet Jewelers Ltd. (SIG) dropped 25% after the retailer cut
guidance for its fourth quarter and fiscal 2019
(http://www.marketwatch.com/story/signet-shares-fall-premarket-after-it-cuts-guidance-citing-weaker-than-expected-holiday-sales-2019-01-17)
and said its holiday performance fell short of expectations.
Amazon.com Inc. (AMZN) rose 0.6% after Consumer Intelligence
Research Partners Inc
(http://www.marketwatch.com/story/amazon-prime-membership-exceeds-100-million-2019-01-17).
said that Amazon Prime membership has reached 101 million
members.
Shares of PPP Industries Inc. (PPG) gained 4.7% after the
company issued a downbeat outlook
(http://www.marketwatch.com/story/ppg-beats-profit-expectations-but-gives-downbeat-outlook-2019-01-17).
Blue Apron Holdings Inc.(APRN) shares skidded 11% after the
meal-kit company was included in a list of 10 potential
bankruptcies
(http://www.marketwatch.com/story/blue-apron-shares-slide-after-company-is-named-in-list-of-possible-2019-bankruptcies-2019-01-17)
in 2019 by Investor Place.
How were other markets trading?
Markets in Asia traded lower
(http://www.marketwatch.com/story/asian-shares-rise-but-report-of-us-probe-into-huawei-mutes-gains-2019-01-16),
with Japan's Nikkei , China's Shanghai Composite Index , and Hong
Kong's Hang Seng all losing ground.
In Europe, markets ended mostly lower
(http://www.marketwatch.com/story/european-markets-drop-as-socgen-warns-on-q4-revenues-2019-01-17),
with the FTSE 100 down 0.4%.
Crude oil retreated
(http://www.marketwatch.com/story/oil-sinks-on-china-slowdown-fears-natural-gas-surges-5-2019-01-17),
while gold settled lower
(http://www.marketwatch.com/story/gold-slips-from-2-week-high-as-1300-proves-to-be-a-near-term-barrier-2019-01-17)
and the U.S. dollar was mostly unchanged
(http://www.marketwatch.com/story/dollar-major-currencies-stable-as-shutdown-brexit-and-muted-european-data-scrutinized-2019-01-17).
--Mark DeCambre contributed to this report
(END) Dow Jones Newswires
January 17, 2019 16:28 ET (21:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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