MARKET SNAPSHOT: Dow Holds On To 26,000, But Stock Market Under Pressure As Energy Sector Slips

Alcoa drops about 8% on disappointing results, Morgan Stanley trades flat

U.S. stock benchmarks were trading lower on Thursday, fresh off a record run for the three main indexes, highlighted by a history-setting close for the Dow above 26,000 for the first time and marking the fastest pace for such 1,000-point move to a round-number milestone.

Thursday's action had investors focused on a potential for a partial government shutdown and quarterly earnings results.

What are the main benchmarks doing?

The Dow Jones Industrial Average was down 80 points, or about 0.3%, to 26,034. The blue-chip average briefly hit a fresh intraday record near the open at 26,153.42 before retreating. Boeing Co. (BA), which has been the biggest contributor to the Dow's recent rally, led losses, contributing about 50 points to the average's decline.

Meanwhile, the S&P 500 was down 5 points, or 0.2%, at 2,797, led by a 0.6% decline in the energy and a 0.3% in consumer-staples sector.

The Nasdaq Composite Index fell 8 points, or 0.1%, at 7,289.

All three major indexes closed at all-time highs on Wednesday (http://www.marketwatch.com/story/dow-futures-point-to-triple-digit-gain-and-fresh-push-toward-26000-2018-01-17), driven by optimism over the economy and corporate results. Leading the pack, the Dow rallied more than 330 points to close at 26,115.65, the first finish ever above 26,000. The S&P 500 rose 0.9% to 2,802.56. The Nasdaq Composite Index rose 1% to 7,298.28.

What's driving markets?

Lawmakers are working to carve out a deal to avoid a looming shutdown for Saturday. The two main political parties looked to be making little headway though, with immigration a major sticking point. Republican leaders are scheduled to bring forward a short-term spending bill to keep the government running through mid-February, the Wall Street Journal reported (https://www.wsj.com/articles/immigration-talks-continue-as-government-shutdown-looms-1516211283).

The move for equity gauges also come as the 10-year benchmark yield climbs to a level not seen in months above 2.6%, which could influence appetite for assets perceived as risky like stocks. Higher government-bond yields can raise the appeal of those assets when compared against stocks.

Read:Government shutdowns haven't always been so bad for Wall Street stocks (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)

Which stocks look like key movers?

Shares of aluminum producer Alcoa Corp.(AA) slumped 7% after quarterly results missed Wall Street forecasts (http://www.marketwatch.com/story/alcoa-shares-fall-5-after-quarterly-results-miss-street-view-2018-01-17).

Morgan Stanley (MS) slipped 0.1% even after earnings topped estimates (http://www.marketwatch.com/story/morgan-stanley-shares-climb-after-earnings-top-estimates-2018-01-18).

Wyndham Worldwide Corp. (WYN) said it would pay $1.95 billion in cash (http://www.marketwatch.com/story/wyndham-worldwide-to-pay-195-billion-for-la-quintas-hotel-business-2018-01-18) to buy La Quinta Holdings Inc.'s (LQ) hotel franchise and management business. La Quinta shares were up 2.7%.

Apple Inc.(AAPL) shares could remain in focus as investors digest a series of plans announced Wednesday celebrated as promises to hire thousands of workers and bring home billions of dollars in cash, but which came under fresh scrutiny (http://www.marketwatch.com/story/apple-didnt-say-it-was-hiring-20000-new-workers-nor-bringing-back-its-overseas-cash-2018-01-17). Shares were up 0.2%.

Amazon.com Inc. (AMZN) was trading 0.2% higher as it said it had identified 20 finalists (http://www.marketwatch.com/story/amazon-narrows-list-for-hq2-to-20-metropolitan-areas-2018-01-18)for its second headquarters.

IBM Corp.(IBM) and American Express Co.(AXP) are scheduled to report after the bell.

What are strategists saying?

"I wouldn't be surprised if markets made a small retreat, or at least took a breather given the threat of a shutdown this weekend. Avoid a shutdown and much of the enthusiasm for equities will be driven by corporate results which have, so far, been supportive of this rally," said Lee Wild, head of equity strategy at Interactive Investor, in emailed comments.

Lee added that the modest moves lower for the Dow are fairly insignificant given the strength of Wednesday's rally.

"Historically, in an environment of slowly rising yields the market has down very well," said Randy Frederick, vice president for trading and derivatives at the Schwab Center for Financial Research,

"Yields may be rising because as the market continues to perform astoundingly there might be concerns that the [Federal Reserve] is going to raise rates even more than expected and there's even some talk that that might be necessary," he said. The market is expecting between three or four interest-rate hikes of a quarter-percentage point in 2018, according to CME Group data (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/).

What economic data are coming?

Weekly jobless claims fell to a 45-year low, falling by 41,000 to 220,000. Meanwhile, construction on new houses fell 8.2% in December to a 1.19 million annual rate, with economists polled by MarketWatch forecasting housing starts to total 1.28 million. Permits for future construction were basically flat at 1.30 million.

Still, permits, housing starts and the number of new homes completed all hit the highest levels since 2007 (http://www.marketwatch.com/story/us-housing-starts-fizzle-at-end-of-2017-2018-01-18).

A gauge of Philadelphia-area manufacturing fell to five-month low (http://www.marketwatch.com/story/philadelphia-fed-manufacturing-index-drops-to-five-month-low-in-january-2018-01-18) of 22.2 in January, the Philadelphia Fed said Thursday.

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

Cleveland Fed President Loretta Mester will speak on monetary policy at 6:05 p.m. Eastern.

What are other assets doing?

European stocks were modestly higher, while Asian markets largely gained (http://www.marketwatch.com/story/nikkei-breaks-24000-for-first-time-since-1991-as-asian-markets-build-on-gains-2018-01-17), lifted by technology stocks. Gold futures (http://www.marketwatch.com/story/gold-under-pressure-as-dollar-regains-some-traction-2018-01-18) fell as the U.S. Dollar Index traded at 90.46.

Oil futures were trading slightly lower. Bitcoin moved above $11,000 (http://www.marketwatch.com/story/bitcoin-struggles-to-keep-grip-on-11000-as-it-tries-to-shake-off-selloff-2018-01-18), a day after a particularly volatile session for cryptocurrencies.

Read:Why bitcoin's ugly rout could get worse before it gets better (http://www.marketwatch.com/story/5-key-reasons-bitcoin-other-cryptocurrencies-have-lost-a-stunning-365-billion-in-10-days-2018-01-17)

(END) Dow Jones Newswires

January 18, 2018 10:54 ET (15:54 GMT)