Stocks turned early losses into mixed trade Thursday as overseas markets slipped and earnings news pressured early action. Positive manufacturing and unemployment data may have eased some opening declines, and action on the stock market today could be overshadowed by the fourth-quarter report from Netflix (NFLX), due out after the closing bell.
Morgan Stanley (MS), KeyCorp (KEY) and railroad CSX (CSX) all dropped hard after reporting fourth-quarter earnings. Game designer Electronic Arts (EA) tumbled on an analyst downgrade. Among stocks near buy points, chipmaker Xilinx (XLNX) edged higher on an analyst upgrade. Marijuana stock Aurora Cannabis (ACB) tanked after announcing a $250 million debt offering late Wednesday.
The Nasdaq Composite shed its early decline and climbed 0.1%. The S&P 500 also reversed, edging up into a very narrow gain. The Dow Jones industrial average had furiously trimmed its opening losses to less than 0.1%.
Among the Dow Jones industrials, Home Depot (HD) opened down more than 2% on a price target cut. Big tech Dow stocks Apple (AAPL) and Microsoft (MSFT) also traded lower. Netflix slipped 0.2% ahead of its earnings report late today.
Data storage leader Western Digital (WDC) and Morgan Stanley posted the deepest declines among both S&P 500 and Nasdaq 100 stocks. Western and peer Seagate Technology (STX) were down hardest among Nasdaq 100 names.
Dow Jones Nears Its Test As Nasdaq, S&P 500 Stall
A positive session for the Dow Jones industrial average on Wednesday left the index tracking toward a fourth-straight weekly advance and less than 1% below its 50-day moving average. The S&P 500’s advance on Wednesday stalled precisely at its 50-day line, suggesting possible resistance. The Nasdaq’s early Wednesday advance also faded as the index struggled to break the gravity and climb free of its 50-day level. Wednesday’s session added one distribution day each to both the Nasdaq and S&P 500.
Philly Fed Jumps, Jobless Claims Dip
Early economic news may have helped ease some premarket losses on the stock market today. First-time unemployment claims decreased slightly in the week ended Jan. 12, the Labor Department reported. That quelled concerns that the federal shutdown might triggered a sudden rise in claims. Economists had forecast an increase to 221,000 claims, vs. 216,000 applications filed in the prior week.
Manufacturing in the mid-Atlantic region has surged in January, according to the Phildelphia Federal Reserve’s Manufacturing Business Outlook Survey. The manufacturing activity index jumped to 17 for the month, up from 9.5 in December, despite declines in shipments and employment. New orders popped to their highest level in six months, the report said. Economist consensus had projected an uptick to 10 for the manufacturing activity index.
Morgan Stanley Misses, Dow Jones Stock Home Depot Slides
Dow Jones stock Home Depot dropped 2.4% in early action. JPMorgan trimmed the stock’s price target to 203, from 208. A weaker-than-expected fourth-quarter report on Wednesday from paint retailer Sherwin Williams (SHW) had investors reassessing revenue and earnings targets across the home improvement space. Home Depot shares are back above their 10-week moving average, but still deep in a four-month consolidation.
Investment bank Morgan Stanley skidded more than 5% lower after reporting fourth-quarter declines in both earnings and revenue, falling short of analyst estimates. Fixed income and institutional securities revenues were weak spots. Investment banking revenue was flat, year over year. Total assets under management decreased 4%, to $463 billion. Morgan Stanley shares popped 3.8% in very heavy trade on Wednesday, boosted by results from Goldman Sachs (GS) and Bank Of America (BAC). Morgan Stanley stock remains down 25% from its high mark in March.
Federal Shutdown: 26 Days
The budget stalemate that has left a broad swathe of federal government offices and operations unfunded enters its 27th day with still no progress in sight between the White House and House Democrats at odds over $5.7 billion in funding for a barrier across the U.S. southern border. President Trump on Wednesday signed a bill assuring that the estimated 800,000 federal workers furloughed by the standoff would receive back pay once the matter was settled. Workers missed their first paycheck of the year on Friday.
Xilinx Upgraded To Buy
Xilinx gave up and early gain to trade a fraction in the red. Mizuho upgraded the chip maker to buy, from neutral, and placed a 100 price target on the stock. Evercore ISI had listed Xilinx among its “top five ideas for 2019” on Monday, and also raised its price target on the stock to 100. Shares of Xilinx ended Wednesday 5% below a 95.28 buy point in a cup base.
China Gets Warning, Fresh Stimulus
Stocks in China fell, ending a two-day advance, after Premier Li Keqiang warned that the Chinese economy would face difficulties in the year ahead. He also pledged more investment in public services and infrastructure, and to expand consumption. Money supply data this week showed weakness in several key credit gauges, triggering the People’s Bank of China to inject a daily record of $83 billion into China’s financial system on Wednesday, followed by an input of another $56 billion on Thursday.
The Shanghai Composite fell 0.4%. Hong Kong’s Hang Seng index declined 0.5%.
Europe: May Survives, Stocks Slip
Markets in Europe and the U.K. traded lower in afternoon action. Prime Minister Theresa May survived a no-confidence vote by Parliament late Wednesday. That snuffed out for the time being an effort by the opposition Labour party to trigger a general election and oust May from office. May hit the ground running, attempting to cobble together a new Brexit agreement after Tuesday’s emphatic vote against her prior proposal. Britain’s current deadline to exit the European Union is March 29.
London’s FTSE 100 was down 0.7% and tracking lower for the week. Frankfurt’s DAX and the CAC-40 in Paris slipped 0.4% and 0.7%, respectively. Both remained on track for a third-straight weekly advance.
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