Alcoa drops about 7% on disappointing results
U.S. stock benchmarks finished lower Thursday, pressured by worries over the possibility of a partial government shutdown, as investors sorted through a fresh batch of quarterly earnings results.
The Dow, however, managed to retain a foothold above 26,000 while the S&P 500 tied the longest stretch in history without a 5% pullback (http://www.marketwatch.com/story/heres-another-milestone-the-sp-500-could-surpass-this-month-2018-01-03) (http://www.marketwatch.com/story/heres-another-milestone-the-sp-500-could-surpass-this-month-2018-01-03) (http://www.marketwatch.com/story/heres-another-milestone-the-sp-500-could-surpass-this-month-2018-01-03) at 394 sessions.
What are the main benchmarks doing?
The Dow Jones Industrial Average fell 97.48 points, or 0.4%, to 26,017.81. The blue-chip average hit an intraday record just after the open at 26,153.42 before retreating and was, at one point, down 168 points to 25,947.32. Boeing Co. (BA), which has been the biggest contributor to the Dow's recent rally, led losses, accounting for nearly 70 points (http://www.marketwatch.com/story/boeings-stock-drop-exacts-50-point-toll-on-dow-industrials-in-late-morning-trade-2018-01-18) of the average's decline.
The S&P 500 was off 4.53 points, or 0.2%, to 2,798.03, led by declines in energy, real estate, and utilities. The Nasdaq Composite Index shed 2.23 points to 7,296.05.
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. Democrats and Republicans 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 climbed above 2.6%, a level not seen in months, 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. Bond prices and yields move inversely.
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 were 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) rose 0.9% 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 3.8%.
Amazon.com Inc. (AMZN) edged up 0.% 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.
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 done 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/).
First-time weekly jobless claims fell to a 45-year low, dropping 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.
How did other assets do?
European stocks ended modestly higher (http://www.marketwatch.com/story/european-stocks-edge-up-as-chinese-data-cheers-traders-2018-01-18), 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) finished sharply lower as the U.S. Dollar Index traded little changed (http://www.marketwatch.com/story/gold-under-pressure-as-dollar-regains-some-traction-2018-01-18).
Oil futures were trading lower. Bitcoin traded 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)
--Barbara Kollmeyer contributed to this report.
(END) Dow Jones Newswires
January 18, 2018 16:36 ET (21:36 GMT)