U.S. Stocks Little Changed on Mixed Earnings Reports

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Nikkei posts biggest drop of the year

-- Eurozone economy accelerates in 2018

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-- Pound at highest since Brexit vote

A drop in the dollar halted a stock rally in Europe and Japan on Wednesday, even as U.S. shares were set for a buoyant open.

Futures pointed to a 0.3% rise for the S&P 500, but the Stoxx Europe 600 was flat after four days of gains, the U.K.'s multinational-heavy FTSE 100 fell 0.5% and Japan's Nikkei Stock Average shed 0.8%.

That came as the ICE U.S. Dollar Index fell 0.6%, dropping below 90 for the first time since December 2014. A weaker dollar tends to hurt shares of multinationals based overseas as their revenues are worth less when translated back into stronger local currencies.

It tends to be a boon for S&P 500 multinationals, however, with the index generating roughly 30% of revenues outside the U.S., according to FactSet.

The U.S. dollar's decline steepened Wednesday after U.S. Treasury Secretary Steven Mnuchin said the Trump administration were "fans of bilateral trading agreements" and brushed off concerns about the dollar during a briefing at the World Economic Forum in Davos, Switzerland. "Where it is short term isn't a concern at all," he said. "A weaker dollar is good for trade."

A group of 11 Pacific Rim nations recently agreed to forge a new commercial bloc that excludes the U.S., while President Donald Trump signed orders to curb cheap Asian imports he said had unfairly harmed American manufacturers.

Still, few investors were pricing in a major pickup in trade tensions in the near term. "The latest measures are small in the broad context of U.S. trade and we don't anticipate a serious escalation," said Daniel Morris, a senior investment strategist at BNP Paribas Asset Management.

The dollar has been on a downward trend for months, hit by growing confidence in economies outside the U.S., particularly the eurozone, and a sense their central banks might be stepping off the accelerator on stimulus programs.

Data on Wednesday showed the eurozone economy accelerated further as 2018 got under way, with the IHS Markit composite Purchasing Managers Index reaching its highest level in almost 12 years. That helped send the euro up 0.5% to $1.2355, around a three-year high.

The European Central Bank meets on Thursday, although no policy changes are expected this week.

The British pound rose 1.3% to $1.4176, its highest since the Brexit referendum in June 2016. The U.K. employment level reached a record high in the three months through November, data showed Wednesday, and some investors said the data supported a somewhat more hawkish tone from the Bank of England.

In U.S. premarket trading, shares of Texas Instruments and United Continental Holdings fell around 7% each after reporting fourth-quarter results. Qualcomm shares were down 1.5% on news it is set to be slapped with a European Union antitrust fine over payments it made to Apple.

In Europe, shares of French water-management company Suez fell 15% after it said its net profit dropped slightly on the year. Novartis shares rose 3.5% after the Swiss pharmaceuticals company beat profit forecasts for the fourth quarter and offered upbeat guidance for 2018.

Despite a 2.8% climb in the euro against the dollar this year alone, European stocks have still managed to rally 3.6%, while Japan's Nikkei has risen 5.2% despite a 3% gain in the yen.

"The better growth that we're seeing is far outweighing any potential hit one might see from a currency aspect," said Gautam Batra, head of investments at Mediolanum Asset Management.

On Wednesday, however, the dollar's steep moves sent the Nikkei to its biggest daily loss of the year. Shares of banks and financials fell, tracking a decline in bond yields on Tuesday.

Hong Kong's Hang Seng rose 0.1% to another record close following an early decline of more than 0.5%

As the dollar weakened, gold rose 1.1% to $1,351.90 an ounce, while copper futures rose 1.5% to $7,025 a ton.

Yields on 10-year U.S. Treasurys rose to 2.662% from 2.622% on Tuesday. Yields move inversely to prices.

Paul Hannon contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Kenan Machado at kenan.machado@wsj.com

-- Dow Jones Industrial Average, S&P 500 open higher

-- European shares edge lower

-- Stocks in Asia mixed

-- Nikkei posts biggest drop of the year

-- Eurozone economy accelerates in 2018

-- Pound at highest since Brexit vote

The Dow Jones Industrial Average and the S&P 500 were on track to close at fresh records, as a drop in the dollar and a string of upbeat earnings lifted stocks higher Wednesday.

The Dow industrials added 140 points, or 0.5%, to 26345 soon after the opening bell. The S&P 500 gained 0.2%, while the Nasdaq Composite was mostly flat. Both the Dow and the S&P 500 were on track to close above their previous records.

Stocks, already off to their best start in years, got another boost Wednesday, as the ICE U.S. Dollar Index fell 0.6%, dropping below 90 for the first time since December 2014.

A weaker dollar tends to be a boon for S&P 500 multinationals, with the index generating roughly 30% of revenues outside the U.S., according to FactSet.

Company earnings announcements also contributed some of the biggest individual stock moves.

W.W. Grainger rose 14% in recent trading after the distributor of cleaning supplies, safety gear and other items that are used to operate factories, schools and commercial buildings reported better-than-expected earnings.

Meanwhile, shares of United Continental Holdings fell 10% after it said fourth-quarter profit rose 46% on a modest gain in revenue.

Elsewhere, Hong Kong's Hang Seng rose 0.1% to another record close following an early decline of more than 0.5%

The U.S. dollar's decline steepened Wednesday after U.S. Treasury Secretary Steven Mnuchin said the Trump administration supports "bilateral trading agreements" and brushed off concerns about the dollar during a briefing at the World Economic Forum in Davos, Switzerland. "Where it is short term isn't a concern at all," he said. "A weaker dollar is good for trade."

The dollar's slide isn't helpful for multinationals based overseas, however, as their revenues are worth less when translated back into stronger local currencies. The Stoxx Europe 600 was down less than 0.1%, while Japan's Nikkei declined 0.8%.

A group of 11 Pacific Rim nations recently agreed to forge a new commercial bloc that excludes the U.S., while President Donald Trump signed orders to curb cheap Asian imports he said had unfairly harmed American manufacturers.

Still, few investors were pricing in a major pickup in trade tensions in the near term. "The latest measures are small in the broad context of U.S. trade and we don't anticipate a serious escalation," said Daniel Morris, a senior investment strategist at BNP Paribas Asset Management.

The dollar has been on a downward trend for months, hit by growing confidence in economies outside the U.S., particularly the eurozone, and a sense their central banks might be stepping off the accelerator on stimulus programs.

Write to Riva Gold at riva.gold@wsj.com and Kenan Machado at kenan.machado@wsj.com

-- Dow Jones Industrial Average up

-- S&P 500, Nasdaq edge lower

-- European shares slide

Major U.S. stock indexes wobbled Wednesday, as mixed earnings reports put their rally into this year on pause.

Shares of several airliners were battered after United Continental Holdings reported better-than-expected profits and laid out plans that would help it cope with rising costs. That, along with lackluster results from General Electric and Texas Instruments, offset gains among companies that released generally upbeat results.

Still, analysts say they expect more companies to announce mostly positive quarterly results over the coming weeks that should support further stock gains.

"Earnings are the key driver right now," said Terry Sandmen, chief equity strategist at U.S. Bank Wealth Management. About 18% of S&P 500 companies reported earnings so far and sales appear to be "trending up," he added. "In an environment where you have restrained inflation, higher earnings means higher stock prices."

The Dow Jones Industrial Average rose 35 points, or 0.1%, to 26244 in recent trading after climbing roughly 182 points earlier in the session. The S&P 500 fell 0.2%, while the Nasdaq Composite slid 0.7%.

Shares of United Continental Holdings fell 11% after the airliner reported higher-than-anticipated profit late Wednesday despite facing higher costs. Concerns over fuel costs and other expenses pressured shares of other airline companies due to report results on Thursday, including American Airlines Group and Southwest Airlines.

American Airlines shares fell 7.3% in recent trading, while Southwest declined 4.3%.

Shares of Texas Instruments tumbled 9.4% after the chip maker said a one-time charge related to the tax law cut into short-term earnings, contributing to a 0.7% decline among tech companies in the S&P 500.

Those losses offset gains among companies that reported generally positive results. Shares of W.W. Grainger added 16% to lead the S&P 500 after the distributor of cleaning supplies, safety gear and other items that are used to operate factories, schools and commercial buildings reported better-than-expected earnings.

Navient shares gained 6.5% after the student loan servicer swung to a net loss due to a one-time write-down of deferred tax assets. Excluding the write-down, Navient reported a profit slightly ahead of analysts' projections.

Meanwhile, the U.S. dollar's decline steepened Wednesday after U.S. Treasury Secretary Steven Mnuchin said the Trump administration supports "bilateral trading agreements" and brushed off concerns about the dollar during a briefing at the World Economic Forum in Davos, Switzerland. "Where it is short term isn't a concern at all," he said. "A weaker dollar is good for trade."

The ICE U.S. Dollar Index fell 0.9%, dropping below 90 for the first time since December 2014. A weaker dollar tends to be a boon for S&P 500 multinationals, with the index generating roughly 30% of revenues outside the U.S., according to FactSet.

The dollar has been on a downward trend for months, hit by growing confidence in economies outside the U.S., particularly the eurozone, and a sense their central banks might be stepping off the accelerator on stimulus programs.

The dollar's slide isn't helpful for multinationals based overseas, however, as their revenues are worth less when translated back into stronger local currencies.

The Stoxx Europe 600 fell 0.5% to snap a four-session winning streak, while Japan's Nikkei declined 0.8%.

Write to Riva Gold at riva.gold@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

January 24, 2018 13:13 ET (18:13 GMT)

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