IBM shares decline
U.S. stocks mostly rose on Friday, suggesting major indexes would close out a positive week on the back of strong corporate earnings, although the prospect of a looming government shutdown kept buyers in check.
Continue Reading Below
While a shutdown is seen as having little impact on the pace of economic growth, such an outcome would add another element of uncertainty to a market that is already seen as trading at lofty levels, and which hasn't seen even a mild decline in more than a year.
Read: A government shutdown 'could reintroduce investors to the fact that markets go down' (http://www.marketwatch.com/story/a-government-shutdown-could-reintroduce-investors-to-the-fact-that-markets-go-down-2018-01-19)
What are stock indexes doing?
The Dow Jones Industrial Average fell 47 points to 25,969, down 0.2%. The S&P 500 rose 4 points, or 0.2%, to 2,802. The Nasdaq Composite Index rose 25 points, or 0.4%, to 7,321.
The S&P 500 is poised to set a record at the close of trading on Friday, as it will mark 395 sessions since it has fallen 5%, an unprecedented length of time (http://www.marketwatch.com/story/heres-another-milestone-the-sp-500-could-surpass-this-month-2018-01-03).
All three are trading within 1 percentage point of record levels. For the week, the Dow is up 0.6%, while the S&P 500 has gained 0.6% and the Nasdaq is up 0.8%.
Both the Dow and the S&P 500 are set for their third straight weekly advance, as well as their eighth of the past nine. The Nasdaq is also set for its third positive week in a row, as well as its fifth positive week of the past six.
Read: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)
Even with the uncertain political backdrop, stocks have been able to continue their march higher in 2018. The S&P 500 is up 4.8% this month, while the other major benchmarks have jumped more than 5%. The solid start to the new year comes on signs economic growth remains strong and corporate earnings are picking up.
Read: Why ditching stocks in this bull market is a 'dangerous' move (http://www.marketwatch.com/story/dont-ditch-the-bull-market-its-dangerous-to-be-out-of-stocks-top-uk-fund-manager-says-2018-01-16)
What is driving the markets?
The House on Thursday passed a one-month spending bill that would keep the government funded through Feb. 16, but the stopgap measure currently doesn't have enough support to clear the Senate. The current interim funding bill that was passed in December expires at 12:01 a.m. Eastern Time, on Saturday.
The Senate adjourned without a final vote late on Thursday and reconvened at 11 a.m. Eastern Time on Friday.
What are strategists saying?
"I would characterize a shutdown as just the kind of political news that the market has demonstrated, over the past year, a willingness to ignore," said Hank Smith, co-chief investment officer at Haverford Trust, which manages $8 billion. He said that "the market is reacting to GDP growth both here and abroad, and corporate profits, which are growing by double-digit rates and are healthy, interest rates that remain low despite a gradual uptick, and benign inflation."
Boris Schlossberg, managing director of FX strategy, in a Friday note, said: "The government shutdown per se may not have much economic impact on the U.S. economy, but the specter of uncertainty that it could spread through the general economy could dent investor sentiment especially if the drama in DC turns into a protracted battle of the wills."
Which stocks are in focus?
Chip makers rallied on optimism over the group's upcoming earnings, with Mizuho analyst Vijay Rakesh saying that chip pricing trends were positive (http://www.marketwatch.com/story/chip-pricing-trends-could-boost-amd-nvidia-and-micron-results-analyst-2018-01-19). Advanced Micro Devices Inc.(AMD) rose 1.1% while Nvidia Corp.(NVDA) was up 2.5%.
Shares of International Business Machines Corp.(IBM) dropped 4.3% after the tech company late Thursday reported a fourth-quarter loss (http://www.marketwatch.com/story/ibm-shares-fall-despite-first-revenue-growth-in-5-years-2018-01-18) due to a $5.5 billion one-off charge from the recently-passed tax legislation.
American Express Co.(AXP) fell 3.2%. The credit card company late Thursday recorded its first quarterly loss (http://www.marketwatch.com/story/amex-reports-first-loss-since-1992-due-to-tax-hit-2018-01-18) in over a quarter-century and said it would suspend its share buy backs in response to a hit from the corporate tax cut.
Both IBM and AmEx are Dow components, and the weakness in the two contributed to the overall decline in the blue-chip average.
Shares of Acorda Therapeutics Inc. (ACOR) rose 9% on reports that the company was closing in on a buyer (https://seekingalpha.com/news/3323826-potential-suitors-eyeing-acorda-therapeutics-shares-ahead-9-percent-premarket).
Shares of Square Inc. (SQ) rose 5.4% after analysts at Instinet raised their target (http://www.marketwatch.com/story/square-stock-jumps-after-instinet-raises-price-target-to-64-new-street-high-2018-01-19) price to $64, by far the highest among Wall Street analysts tracked by FactSet.
Tobacco companies rose, with Philip Morris International Inc.(PM) up 2.8% and Altria Group(MO) adding 1.3%. Both were among the biggest gainers in the consumer staples sector, which was itself the top-performing industry of the day, up 0.7%.
Travel retailer Hudson Ltd. (HUD.V) set the terms for its planned initial public offering on Friday (http://www.marketwatch.com/story/travel-retailer-hudson-sets-ipo-terms-to-offer-349-million-shares-at-19-to-21-a-pop-2018-01-19), saying it will offer 34.9 million shares priced at $19 to $21 each.
Read:More than half of S&P 500 stocks are up 20% or more since Trump took office (http://www.marketwatch.com/story/more-than-half-of-sp-500-stocks-are-up-20-or-more-since-trump-took-office-2018-01-19)
What's on the economic calendar?
The University of Michigan's consumer sentiment index fell in January to a reading of 94.4, the worst reading since July (http://www.marketwatch.com/story/consumer-sentiment-falls-to-six-month-low-on-concern-over-prices-uncertain-tax-cut-benefit-2018-01-19).
Federal Reserve Vice Chair Randall Quarles will speak on bank regulation to the American Bar Association in Washington at 1 p.m.
See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
What are other markets doing?
The ICE U.S. Dollar index was up 0.1% at 90.61 (http://www.marketwatch.com/story/dollar-slides-back-to-3-year-low-on-fears-of-government-shutdown-2018-01-19), with currency traders paying more attention to the shutdown issue in Washington.
Oil prices also slumped (http://www.marketwatch.com/story/oil-prices-sink-1-head-for-biggest-weekly-loss-since-oct-2018-01-19) 1.1%, staying lower after the International Energy Agency said shale producers would help drive U.S. production to levels not seen since the 1970s.
Gold prices (http://www.marketwatch.com/story/gold-bounces-back-as-dollar-falls-on-us-shutdown-concerns-2018-01-19)(GCG.T) rose 0.5%, getting a boost from the weaker dollar.
Asian stock markets closed mainly higher (http://www.marketwatch.com/story/asian-markets-start-off-quiet-with-investors-eyes-on-us-shutdown-2018-01-18), inspiring an upbeat session in Europe as well.
(END) Dow Jones Newswires
January 19, 2018 13:57 ET (18:57 GMT)
Continue Reading Below