MARKET SNAPSHOT: Stock Market Trades Off Session Highs But Dow Still Holds Boeing-powered Gain

By FeaturesDow Jones Newswires

Boeing's stock, up more than 5%, was contributing about 125 points to the Dow industrials

U.S. stock benchmarks pared firm gains on Wednesday, but traded mostly higher, putting the Dow in position to recover some of its roughly 540 points lost over the past two sessions, as health-care stocks remained under pressure.

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Strategists said President Donald Trump's relatively subdued, and less inflammatory, State of the Union address could be helping the investing mood, as traders brace for a Federal Reserve statement, more earnings reports and a raft of economic data.

What are the main benchmarks doing?

Dow Jones Industrial Average gained 130 points, or 0.5%, to 26,208, led by a 5.4% rise in shares of Dow component Boeing Co., contributing about 125 points to the price-weighted average.

The S&P 500 index added 3 points, or 0.1%, to 2,825, with the health-care sector, down 1.1%, capping the broad-market benchmark's advance, adding to the slide for the sector after Amazon.com Inc. (AMZN), Berkshire Hathaway (BRKA) a(BRKA) and J.P. Morgan Chase (JPM)announced a plan (http://www.marketwatch.com/story/amazon-berkshire-hathaway-and-jp-morgan-will-form-company-to-improve-employee-health-care-2018-01-30) on Tuesday to form a company to address rising health costs for their U.S. employees, rattling the sector.

The Nasdaq Composite Index tacked on 13 points, or 0.2%, to 7,415.

All three main equity gauge's were off their best levels, with the Dow having surged 262 points higher during its session peak.

On Tuesday, the Dow suffered its biggest one-day drop in eight months (http://www.marketwatch.com/story/dow-futures-slide-150-points-signaling-another-painful-session-2018-01-30), falling by about 363 points, or 1.4%. The S&P 500 gave up 1.1%, and the Nasdaq Composite lost 0.9%.

What's helping to drive markets?

The three main stock gauges have slumped this week, with analysts saying rising bond yields have helped peel money away from equities. The yield on the 10-year Treasury note was down slightly at 2.704% Wednesday, after touching a three-year high on Tuesday (http://www.marketwatch.com/story/long-dated-treasury-yields-resume-rise-but-short-dated-bond-yields-trade-lower-2018-01-30).

Stocks also were simply due for a pullback after a strong start to the year, according to many analysts. The Dow remains up by 5.5% in 2018 even after this week's selloff, helped by factors such as an expanding U.S. economy, growth in corporate profits, and enthusiasm over recently enacted tax cuts and other business-friendly policies.

Accommodative monetary policy has continued to help the stock market as well, but a relatively hawkish statement from the Fed (http://www.marketwatch.com/story/fed-to-take-a-step-toward-a-march-interest-rate-hike-2018-01-26) is due for release at 2 p.m. Eastern Time. A hike in interest rates isn't expected from the central bank's two-day policy-setting meeting, which ends today. The January meeting is Fed chief Janet Yellen's last as she hands the reins to Jerome Powell.

What data are in focus?

ADP's January report showed that 234,000 private-sector jobs were added. The report comes ahead of the more closely watched nonfarm-payrolls report on Friday. However, the ADP report hasn't always aligned with the Friday jobs figure.

The Chicago PMI slipped 2.1 points to 65.7, MNI Indicators said Wednesday. That said, the reading was still strong, with any reading over 50 (http://www.marketwatch.com/story/chicago-pmi-slips-from-nine-year-high-2018-01-31) indicates improving conditions.

U.S. employment costs rose by 0.6% in the fourth quarter.

U.S. pending home sales (http://www.marketwatch.com/story/pending-home-sales-inch-higher-as-tight-inventory-stifles-housing-market-2018-01-31) rose 0.5% in December, the National Association of Realtors said Wednesday, marking the highest reading since March, even though the index stands just 0.5% higher than a year ago.

What are strategists saying?

"We should get use to an environment in which interest rates are climbing," said Kate Warne, investment strategist at Edward Jones. "It doesn't mean that stocks will drop off a cliff," she said, noting that more volatility is tied to "uncertainty about the pace of economic growth" and earnings growth.

"Equities seem to be appreciating the uneventful State of the Union address from President Trump last night," said Konstantinos Anthis, an ADS Securities analyst, in a note.

"We believe that stock traders will be relieved that Trump toned down his remarks on U.S. trade relations and instead focused on the domestic agenda, but it might not be enough to divert attention back to stocks as long as bonds give a better payout at this time."

Kim Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group, said as stock valuations have mostly climbed investors have grown uneasy.

"I think investors get nervous and it is correct. It is not an invalid kind of emotion, but right now it looks like the economy is super strong and we are getting these great economic indicators," Forrest said, referring to Wednesday's Chicago PMI data and the private-sector employment report.

Investors are asking themselves: "'Do we feel lucky', and what I mean by that is, can earnings rise faster then the stock multiples fall," she said, referring to price-to-earnings ratios which are viewed as historically elevated. "Today the answer is 'yes,' but the past two days the answer to that question has been 'no.'

Read more:Trump praises economy, calls for infrastructure, immigration deals (http://www.marketwatch.com/story/trump-takes-more-optimistic-tone-in-state-of-the-union-2018-01-30)

Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

Which stocks look like key movers?

Shares in Advanced Micro Devices Inc.(AMD) traded 4.7% higher after the chip maker posted better-than-expected quarterly earnings (http://www.marketwatch.com/story/amd-earnings-outlook-top-street-estimates-but-shares-shaky-after-hours-anyway-2018-01-30) late Tuesday.

Check out:AMD earnings cap a stunning 2017, but there is still plenty to do (http://www.marketwatch.com/story/amd-earnings-cap-a-stunning-2017-but-there-is-still-plenty-to-do-2018-01-30)

Shares in Electronic Arts Inc.(EA) were surging more than 9.3% after the videogame producer posted better-than-expected quarterly revenue (http://www.marketwatch.com/story/ea-stock-surges-in-late-trading-after-revenue-beat-2018-01-30) late Tuesday.

Xerox Corp.'s stock (XRX) was 6.8% higher in thin premarket action after the maker of copy machines said its quarterly net loss shrank (http://www.marketwatch.com/story/xerox-net-loss-shrinks-as-it-takes-us-tax-charge-2018-01-31). Xerox's stock also was getting a lift from news that Japan's Fujifilm Holdings Corp. (4901.TO) has taken a majority stake in the company.

Shares of Boeing Co. (BA) rallied 6% in premarket trade Wednesday, after the aerospace and defense contractor reported fourth-quarter profit and revenue that beat expectations, and provided an upbeat outlook (http://www.marketwatch.com/story/boeings-stock-jumps-after-profit-beat-by-wide-margin-upbeat-outlook-2018-01-31).

Drug giant Eli Lilly & Co.'s (LLY) stock fell 4.5% after the company reported fourth-quarter profit and revenue beats and an upbeat outlook (http://www.marketwatch.com/story/eli-lilly-shares-rise-after-q4-profit-revenue-beats-upbeat-outlook-2018-01-31).

D.R. Horton Inc.'s stock (DHI) advanced by 1.5% in as the home builder reported double-digit increases in revenue and orders, and upped its guidance for the year (http://www.marketwatch.com/story/dr-horton-shares-jump-on-strong-results-better-guidance-2018-01-31).

Anthem Inc.(ANTM)medical plans dropped by 13,000 in its latest quarter but increased slightly overall last year, the health insurer said Wednesday. The company beat analysts' estimates (http://www.marketwatch.com/story/anthem-medical-plans-fall-by-13000-in-q4-2018-01-31)in its fourth quarter, posting revenue of $22.4 billion, up 4.5% from a year ago and more than the $22.2 billion analysts expected. Its shares were climbing 4%.

What are other assets doing?

European stocks traded mostly higher, while Asian markets finished mixed. Gold was gaining, but oil futures were lower (http://www.marketwatch.com/story/oil-prices-stumble-ahead-of-us-inventory-data-2018-01-31). The ICE U.S. Dollar Index was adding to its recent drop.

(END) Dow Jones Newswires

January 31, 2018 11:26 ET (16:26 GMT)

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