GE shares under pressure after disclosure of SEC probe
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U.S. stock benchmarks on Wednesday traded in record territory as bank stocks led the way, extending a solid start to the year for Wall Street equities on the back of better-than-expected earnings.
What are the main benchmarks doing?
Dow Jones Industrial Average gained nearly 170 points, or 0.6%, to 26,377, with shares of Goldman Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM) adding a combined 40 points to the blue-chip average's gains. The S&P 500 index tacked 13 points, or 0.5%, to 2,851, propelled in part by gains in the financials sector, up about 0.8%. The Nasdaq Composite Index, meanwhile, was trading up 20 points, or 0.3%, at 7,480.
All three equity benchmarks set fresh all-time intraday highs near the official start of trade.
On Tuesday, the S&P 500 and Nasdaq notched all-time closing highs again (http://www.marketwatch.com/story/dow-futures-rally-100-points-as-investors-move-past-shutdown-worries-to-focus-on-earnings-2018-01-23), while the Dow edged back from its record close hit on Monday.
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The three equity gauges are up between 6% and 8.1% so far in 2018, adding to last year's sizable gains as investors cheer the expanding U.S. economy and growth in corporate profits.
What's driving the markets?
Corporate earnings coming in better than expected has buoyed appetite for equities that have mostly been trading in record territory in January on the back of pro-growth policies, adding to stellar gains from 2017.
Wall Street investors also focused on comments from Treasury Secretary Steven Mnuchin, who said President Donald Trump's administration supports "bilateral trading agreements", saying "a weaker dollar is good for trade." Speaking at the World Economic Forum in Davos (http://www.marketwatch.com/story/dollar-plunges-to-3-year-low-after-mnuchin-cheers-weaker-greenback-2018-01-24), Switzerland, Mnuchin said "where it is short term isn't a concern at all," referring to the dollar's weakness. The U.S. dollar , which declined 10% last year, was trading at a fresh three-year low.
A weaker dollar can be a boon for multinational companies offering products and services abroad.
Mnuchin's comments also helped push yields in the yield on the 10-year Treasury note higher because a weaker dollar can undercut appetite for government paper. The 10-year yield was at 2.66% in recent trade, its highet since April 2014. However, rising yields help bolster the businesses of financial firms, lifting interest income.
What are strategists saying?
"Above all else, earnings are doing well and revenue growth is solid to strong," said Quincy Krosby, chief market strategist at Prudential Financial. "The earnings guidance [from company executives] has been positive and the global economy continues to strengthen. This is all good for the companies," she said.
"The S&P 500 really is up more than 6% so far this month and shows no sign of abatement," said Voya Investment Management strategists Doug Coté and Karyn Cavanaugh in a note.
"What could possibly go wrong? Well, one risk to the market could be global trade," they added, noting that President Trump late Monday approved tariffs (http://www.marketwatch.com/story/first-solar-shares-jump-8-after-white-house-oks-tariffs-on-solar-panel-imports-2018-01-22) on imports of solar panels and washing machines.
Which stocks look like key movers?
Shares in Qualcomm Inc.(QCOM)traded 0.2% lower after the chip company was hit with a $1.2 billion antitrust fine by the European Union (https://www.wsj.com/articles/eu-to-fine-qualcomm-over-exclusivity-payments-to-apple-1516783685?mod=mktw). The EU said Qualcomm made illegal payments to Apple Inc.(AAPL)for exclusively using its chips in iPhones and other products.
Conglomerates General Electric(GE) saw its stock slip 0.% (http://www.marketwatch.com/story/ges-stock-turns-lower-after-disclosure-of-sec-probe-into-insurance-reserve-increase-2018-01-24) it said the Securities and Exchange Commission was probing the process that led to a sizable increase in its insurance reserves (http://www.marketwatch.com/story/ge-shocks-market-with-multibillion-dollar-loss-in-legacy-reinsurance-business-2018-01-16) last week. The industrial conglomerate also reported weaker-than-expected quarterly results (http://www.marketwatch.com/story/ges-stock-surges-despite-surprise-loss-and-revenue-miss-as-power-and-oil-gas-revenue-beats-2018-01-24) but offered a rosier revenue projection for its power and oil-and-gas business.
Comcast Corp.'s stock (CMCSA)was trading 0.7% higher after reporting earnings boosted by its broadband business and after announcing plans to repurchase $5 billion in stock in 2018.
Puma Biotechnology Inc.'s shares (PBYI) slumped by 27% after its price target was lowered, notably by J.P. Morgan Chase, as the company said a European Medicines Agency committee completed a negative vote for its breast cancer therapy neratinib (http://www.marketwatch.com/story/puma-biotech-shares-plummet-after-concerning-turn-in-europe-2018-01-24).
Shares of United Technologies Corp.(UTX) rose modestly, up 0.3%, after its fourth-quarter results, which revealed charges stemming from the new tax law (http://www.marketwatch.com/story/united-technologies-profit-dented-by-tax-charge-2018-01-24).
Texas Instruments Inc.(TXN)declined 5.5% after the chip company delivered in-line results and a modest outlook (http://www.marketwatch.com/story/texas-instruments-shares-fall-on-in-line-results-modest-outlook-2018-01-23) late Tuesday.
United Continental Holdings Inc.(UAL)fell 11FF% after the airline posted earnings (http://www.marketwatch.com/story/united-stock-rises-after-fourth-quarter-earnings-beat-2018-01-23) late Tuesday.
Ford Motor Co.(F)results are due to report after the close of trade. Shares were up about 0.5%.
What are other assets doing?
European and Asian stocks have been a mixed bag.
Gold futures were jumping by more 1.2%, while oil futures (http://www.marketwatch.com/story/natural-gas-soars-with-the-leap-setting-off-a-trading-halt-2018-01-24)were slightly higher, up 0.1%.
What economic data are in focus?
U.S. IHS Markit flash services PMI fell to 53.3 in January, while those for manufacturing rose to 55.5 in January. A reading of at 50 or better indicates improving conditions.
Meanwhile, existing home sales for December showed sales up 5.57 million, down 3.6%, according to Realtor group.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
(END) Dow Jones Newswires
January 24, 2018 10:58 ET (15:58 GMT)