MARKET SNAPSHOT: Stock Market Under Pressure As Rally Takes A Breather

By Barbara Kollmeyer and Mark DeCambre, MarketWatchFeaturesDow Jones Newswires

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

U.S. stock benchmarks traded in break-even territory on Thursday, as investors grew wary of the potential for a partial government shutdown.

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Quarterly earnings results are rolling out from financials such as Morgan Stanley.

What are the main benchmarks doing?

The Dow Jones Industrial Average were down 30 points, or 0.1%, to 26,085, while S&P 500 edged 2 points, or less than 0.1%, lower at 2,801. The Nasdaq Composite Index traded flat at 7,301, down by 0.1%.

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?

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 7.5% 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 0.6% 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 3.6%.

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 0.1%.

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

Amazon.com Inc. (AMZN) was trading 0.5% lower even after 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.

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 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 09:46 ET (14:46 GMT)