MARKET SNAPSHOT: Dow Set To Steady, Nasdaq Under Pressure As Stock Market Rally Takes A Breather
Alcoa drops 8% on disappointing results, Morgan Stanley rises
U.S. stock futures pointed to a flat start for Thursday, with the Dow industrials set to hover near their record 26,000-plus level. Another strong run looked doubtful for now as investors grew wary of the potential for a partial government shutdown.
Quarterly earnings results are rolling out from financials such as Morgan Stanley, while weekly jobless claims and housing starts will also be in focus.
What are the main benchmarks doing?
Dow Jones Industrial Average futures were up 25 points, or 0.1%, to 26,120, while S&P 500 futures edged 0.95 point lower, or less than 0.1%, at 2,802.75. Nasdaq-100 futures fell 17.50 points, or 0.3%, to 6,805.
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 332.79 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?
Optimism over the economy and earnings have helped fuel gains in the new year, with the week already delivering a more than 1% advance for the Dow. However, investors may be looking to catch their breath from that run, with some reluctance to push the market higher ahead of a crucial next few days in politics.
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).
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 8.3% in premarket trade 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) rose 1.1% in premarket after earnings topped estimates (http://www.marketwatch.com/story/morgan-stanley-shares-climb-after-earnings-top-estimates-2018-01-18).
IBM Corp.(IBM) and American Express Co.(AXP) are scheduled to report after the bell.
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, news that drove a 11% premarket gain for La Quinta shares.
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).
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.
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).
The Philadelphia Fed's manufacturing index for January is due at 10 a.m. Eastern.
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 almost a one-week high, though it had pared some of those gains early Thursday (http://www.marketwatch.com/story/dollar-slips-after-rally-but-analysts-see-more-upside-ahead-2018-01-18).
Oil futures were flat. 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 08:44 ET (13:44 GMT)