MARKET SNAPSHOT: Dow Relinquishes Hold Above 26,000 As Stock-market Rally Tapers

By Victor Reklaitis and Anora M. Gaudiano, MarketWatchFeaturesDow Jones Newswires

S&P 500, Nasdaq, Russell 2000 set intraday all-time highs

The Dow Jones Industrial Average held on to a modest gain on Tuesday but the blue-chip index pared some of the earlier advance that had taken it above 26,000 for the first time, as investors weighed political developments against quarterly earnings reports and economic data--both presently underpinning Wall Street's optimism.

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What are the benchmarks doing?

The Dow Jones Industrial Average rose as much as 265 points, but was last up 120 points, or 0.4%, to 25,917. Merck & Co Inc.(MRK) and UnitedHelath Group Inc(UNH) were leading gains, up 7.6% and 2.5% respectively. General Electric Co.(GE) was down more than 4%.

The S&P 500 was up 4 points, or 0.2%, to 2,790, with six of the 11 main sectors trading higher. Real estate and health care shares led the gains, while energy and materials sold off, following dropping oil prices lower.

The Nasdaq Composite was up 9 points, or 0.1%, to 7,270.

The Russell 2000 index of small companies gave up all of the gains and was in negative territory at 1,591.

All main indexes hit intraday all-time highs shortly after the opening bell, but since then pulled back from their highs.

Check out:This epic stock-market rally will get a second wind from stellar earnings (http://www.marketwatch.com/story/this-epic-stock-market-rally-will-get-a-second-wind-from-stellar-earnings-2018-01-13)

What is driving markets?

The New York Times reported that President Donald Trump's former chief strategist Steve Bannon was subpoenaed last week by special counsel Robert Mueller (http://www.marketwatch.com/story/bannon-subpoenaed-in-russia-investigation-report-2018-01-16) to testify as part of the probe into possible links between Trump associates and Russia. That news deflated some of investors's early enthusiasm.

The three major equity benchmarks have risen between 23% and 31% over the past 12 months, helped by factors such as an expanding U.S. economy, growth in corporate profits and enthusiasm over the Trump administration's business-friendly policies, including tax cuts.

On the data front, the Empire State manufacturing survey (http://www.marketwatch.com/story/empire-state-factory-gauge-softens-a-bit-in-january-2018-01-16) slipped to 17.7 in January from a revised 19.6 in December, the New York Fed said. Economists had expected activity to inch up to 18.6, according to a survey by Econoday.

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

What are strategists saying?

"We will see more market exuberance from positive earnings, but there is plenty of political uncertainty that will temper investor expectations," said Alexandra Coupe, associate director and portfolio manager at PAAMCO.

"After a year of good performance and low volatility it is very natural for investors to have 'fear of missing out' and we are likely to continue to see this momentum to persist. We should also remember that when momentum crashes, it does so rather violently," Coupe said.

"Optimism on Wall Street is pretty high as a lot of previously skeptical and bearish investors have turned into stock market fans lately," said Brett Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co.

"But there are reasons for optimism as we have great economic background, growing earnings and still low inflation," Schutte said.

Which stocks are in focus?

UnitedHealth Group Inc.'s stock (UNH) was up 1.2% after the insurer posted quarterly earnings and revenue that topped expectations.

Citigroup Inc.'s (C) reported a loss in the fourth quarter, as its earnings were wiped out by a $22 billion charge related to the new tax law. Shares were trading 1.9% higher.

Shares of Merck & Co.(MRK) jumped 7.6% after the company announced positive results (http://www.marketwatch.com/story/merck-shares-jump-3-on-news-of-positive-results-from-lung-cancer-trial-2018-01-16)in a late-stage lung cancer trial.

General Electric Co.'s stock (GE) fell 3.2% after the conglomerate said a review of GE Capital's insurance portfolio would result in a $6.2 billion after-tax charge (http://www.marketwatch.com/story/ges-stock-sinks-after-unveiling-62-billion-charge-in-q4-2018-01-16) in the fourth quarter.

Shares in Ford Motor Co. (F) rose 0.2%, after the auto maker teased an all-electric SUV (http://www.marketwatch.com/story/ford-teases-all-electric-mach-1-suv-coming-in-2020-2018-01-14) -- the "Mach 1" -- on Sunday, saying it will spend $11 billion on electric cars through 2022. Ford made the announcement at the North American International Auto Show in Detroit.

Also at the Detroit event, Fiat Chrysler Automobiles NV(FCA.MI)(FCA.MI) CEO Sergio Marchionne said Monday he has no plans to sell its Jeep business or split up the company (http://www.marketwatch.com/story/fiat-chrysler-ceo-rules-out-split-jeep-sale-2018-01-16), cooling speculation but leaving the company's long-term strategy unclear. Shares were down 4%.

Energy giant BP PLC(BP.LN) (BP.LN) said Tuesday it expects to book a $1.7 billion post-tax charge (http://www.marketwatch.com/story/bp-to-book-17-billion-deepwater-horizon-charge-2018-01-16-34853027) in its fourth-quarter earnings for claims associated with the 2010 Deepwater Horizon blowout. BP's U.S.-listed shares were down 3%.

Shares of Viacom Inc.(VIA) fell 5.5% after The Wrap on Friday reported that Shari Redstone, president of National Amusements, which owns controlling interests in Viacom and CBS Corp. (CBSA) was reengaging the two media companies in talks to merge.

What are other markets doing?

The ICE U.S. Dollar Index , which measures the buck against a basket of six rivals, was up 0.3% from Monday's level to 90.73, paring its year-to-date loss to 1.5%.

Bitcoin's spot price (http://www.marketwatch.com/story/bitcoin-tumbles-to-6-week-low-as-top-cryptocurrencies-all-sell-off-2018-01-16) was down sharply to a six-week low, as the top cryptocurrencies all sold off. European equities (http://www.marketwatch.com/story/european-stocks-head-higher-as-euro-pulls-back-2018-01-16) and Asian markets (http://www.marketwatch.com/story/asian-stocks-bounce-back-hang-seng-aims-for-a-record-2018-01-16) have scored gains. Gold futures were little changed, and oil futures (http://www.marketwatch.com/story/oil-pulls-back-from-3-year-high-with-brent-below-70-2018-01-16) pulled back.

(END) Dow Jones Newswires

January 16, 2018 13:18 ET (18:18 GMT)