Buoyant stock market looks 'extraordinarily stretched,' says strategist
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U.S. stock futures on Wednesday pointed to a rally at the open, setting up the Dow for a fresh move toward 26,000 after the index failed to close above that milestone.
In focus are quarterly earnings from financial heavyweights, and traders also will be able to assess readings on industrial production and the housing market due later.
What are the main benchmarks doing?
Dow Jones Industrial Average futures were up by 115 points, or 0.5%, to 25,934, while S&P 500 futures added 9.40 points, or 0.3%, to 2,792. Nasdaq-100 futures tacked on 21.50 points, or 0.3%, to 6,783.75.
On Tuesday, the Dow traded above 26,000 for the first time ever, but ended down by less than 0.1% (http://www.marketwatch.com/story/dow-on-track-for-200-point-jump-putting-26000-within-reach-2018-01-16) after its intraday gain of more than 200 points failed to stick. The S&P 500 and Nasdaq Composite finished lower by 0.4% and 0.5%, respectively.
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What's driving markets?
The three main equity gauges have risen between 22% and 30% over the past 12 months, helped by factors such as an expanding U.S. economy, growth in corporate profits and enthusiasm over the Trump administration's business-friendly policies, such as tax cuts.
Traders may be waking up to the possibility of a government shutdown this weekend, some analysts said. Lawmakers are hustling to hammer out a deal on immigration seen as key to breaking the deadlock. Without a spending agreement by 12:01 a.m. Eastern Time Saturday, the government will partially shut down operations.
Check out:Here's how stocks handled past government shutdowns (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)
Several Fed officials are slated to make remarks. Chicago Fed President Charles Evans and Dallas Fed President Rob Kaplan are due to take part in a discussion at 3:15 p.m. Eastern at an insurance-industry event in Florida. Cleveland Fed President Loretta Mester is expected to talk about communicating monetary policy at New Jersey's Rutgers University at 4:30 p.m. Eastern.
Which stocks look like key movers?
Shares in Bank of America Corp.(BAC) were choppy in premarket trading after the giant lender posted quarterly revenue that missed expectations (http://www.marketwatch.com/story/bank-of-america-shares-jump-despite-revenue-miss-2018-01-17).
Goldman Sachs Group Inc.'s stock (GS) was 1% lower premarket after the Wall Street icon posted lower profit and revenue for its fourth quarter (http://www.marketwatch.com/story/goldman-sachs-posts-first-quarterly-loss-in-6-yrs-2018-01-17).
Financial heavyweight Charles Schwab Corp.(SCHW) is also likely to see active trading as it's among the companies expected to post earnings before the open.
Shares in CSX Corp.(CSX) edged lower by 0.2% premarket after the railroad operator late Tuesday posted adjusted quarterly earnings that topped expectations (http://www.marketwatch.com/story/csx-shares-rise-after-railroad-companys-earnings-beat-expectations-2018-01-16).
Aluminum producer Alcoa Corp.(AA) is due to release results after the close.
What are strategists saying?
The stock market was "extraordinarily stretched" on Tuesday morning, and it then took "a breather" as the session progressed, said Peter Boockvar, chief investment officer at Bleakley Financial Group, in a note.
"Bottom line, only a few times in history has the stock market been this overbought," he added. "We know from a variety of sentiment indicators how euphoric the environment has gotten."
What economic data are coming?
A fresh release on the U.S. economy's industrial sector is due at 9:15 a.m. Eastern Time, when a December report on industrial production and capacity utilization is scheduled to come out. Economists polled by MarketWatch expect readings of 0.6% and 77.5%, respectively.
A January figure for a housing market index is slated to arrive at 10 a.m. Eastern, and the Federal Reserve's Beige Book -- which offers a deep dive on economic activity -- is on tap for 2 p.m. Eastern.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
What are other assets doing?
European stocks traded lower (http://www.marketwatch.com/story/european-stocks-follow-wall-street-into-the-red-as-burberry-falls-short-2018-01-17), while Asian markets finished mixed (http://www.marketwatch.com/story/asian-markets-slide-lower-following-late-us-selloff-2018-01-16). Gold futures were down slightly, oil futures were slipping, and the ICE U.S. Dollar Index was modestly higher. Bitcoin briefly traded below $10,000 as a selloff for cryptocurrencies continued (http://www.marketwatch.com/story/bitcoin-cryptocurrencies-attempt-to-steady-after-sharp-selloff-2018-01-17).
(END) Dow Jones Newswires
January 17, 2018 07:52 ET (12:52 GMT)