By Clive McKeef
UnitedHealth's stock weighs on the Dow
U.S. stocks closed higher Thursday, recovering from morning
losses, after New York Federal Reserve president John Williams said
the Fed's wisest strategy is to cut interest rates at the first
sign of economic distress when interest rates are already low.
"When you have only so much stimulus at your disposal, it pays
to act quickly to lower rates at the first sign of economic
distress," Williams said, in a speech at a research conference in
New York
(http://www.marketwatch.com/story/feds-wisest-strategy-is-to-cut-interest-rates-at-first-sign-of-economic-distress-williams-says-2019-07-18).
Stocks rebounded from morning losses, and bond yields slipped,
as did the U.S. dollar in the wake of what investors saw as
confirmation of an interest cut at the Fed's next policy meeting
later this month.
Thursday is the last day for Fed policy makers speeches before
the so-called blackout period for comment by officials ahead of the
FOMC meeting July 30-31.
How are the major benchmarks performing?
The Dow Jones Industrial Average ended up 3 points at 27,222,
the S&P 500 rose 10 points to 2,995.5 and the Nasdaq Composite
index was up 22 points at 8,207.
What's driving the market?
Investors are still monitoring corporate earnings though and
concerned about the lack of progress in resolving the U.S. China
trade dispute.
"Stocks ran up over the past couple of weeks on an increasing
belief that a Fed rate cut was in the offing for July," Brad
McMillan, Chief Investment Officer for Commonwealth Financial
Network, said in a note. "Indeed, that does appear to be the case.
With that cut priced in, however, markets are now looking for
another reason to rise. With the expectations for earnings as
modest as they are, though, the data so far isn't providing that
support.
To date, about 12% of S&P 500 index companies have reported
quarterly results this earnings season and 84% have reported
better-than-expected earnings, according to FactSet data.
"The big question for investors this quarter is how much import
tariff costs are reflected in analysts' earnings estimates," John
Lynch, Chief Investment Strategist at LPL Financial said in a
note.
Import tariffs on Chinese goods remained in place after
President Trump's meeting with China President Xi at the G20 Summit
in Japan last month.
Stocks closed lower for a second day in a row on Wednesday after
The Wall Street Journal reported
(https://www.wsj.com/articles/u-s-china-talks-stuck-in-rut-over-huawei-11563393280?mod=searchresults&page=1&pos=7)that
trade negotiations between the U.S. and China had faltered over
restrictions on Chinese telecommunications giant Huawei, citing
sources familiar with the talks.
However, Treasury Secretary Steven Mnuchin told CNBC that Huawei
was not a sticking point in the negotiations, adding a call between
U.S. and China trade officia
U.S. Treasury Secretary Mnuchin, speaking on CNBC, on the
sidelines of the G-7 finance ministers meeting in France said that
trade talks with China are continuing apace. "Don't believe
everything you read in the press," he said. Mnuchin said that he
and top trade official Robert Lighthizer are set to engage in fresh
talks with his counterparts in China soon.
In economic data, a survey of manufacturers in Pennsylvania ,
New Jersey and Delaware came in much stronger than expected
(http://www.marketwatch.com/story/philadelphia-fed-manufacturing-gauge-rebounds-strongly-in-july-to-highest-level-in-a-year-2019-07-18)
at 21.8 in July, versus 0.3 in June and above expectations of 4.5,
according to a MarketWatch poll of economists. New applications for
jobless benefits rose
(http://www.marketwatch.com/story/jobless-claims-rise-8000-to-216000-in-mid-july-but-theres-no-sign-layoffs-are-rising-2019-07-18)
8,000 to 216,000 in the week ended July 13, but remain at historic
lows.
Which stocks are in focus?
Microsoft (MSFT) rose in after hours trading Thursday after the
company released better-than-expected earnings results for the
fourth quarter of its 2019 fiscal year. On an annualized basis
revenue grew 12% in the quarter, for the ninth straight quarter of
double digit annualized revenue growth.
Morgan Stanley(MS) shares rose after the bank reported
second-quarter revenue and sales in the second quarter that fell
less than analysts had expected but its results showed the steepest
slide in trading revenue among major Wall Street banks.
Shares of Alcoa Corp. (AA) was up though the aluminum producer
reported a smaller-than-expected second-quarter loss
(http://www.marketwatch.com/story/alcoa-posts-narrower-than-expected-q2-loss-2019-07-17)
after Wednesday's close,
(http://www.marketwatch.com/story/alcoa-posts-narrower-than-expected-q2-loss-2019-07-17)
while lowering its guidance for aluminum demand growth in 2019 due
to trade tensions and macroeconomic headwinds.
International Business Machines Corp. (IBM) was higher after
reporting second-quarter earnings
(http://www.marketwatch.com/story/ibm-stock-rises-as-earnings-cloud-revenue-beat-street-view-2019-07-17)
Wednesday evening that beat analyst estimates, boosted by growth in
its cloud business, though revenue declined for the fourth-straight
quarter.
Meanwhile, Netflix Inc.'s (NFLX) downbeat subscription results
reported Wednesday night also weakened sentiment, after the
streaming video giant said it lost 126,000 subscribers in the U.S.
in the second quarter, the first such loss since 2011
(http://www.marketwatch.com/story/netflix-stock-drops-more-than-10-as-earnings-show-huge-drop-in-new-subscribers-2019-07-17).
Meanwhile, shares of UnitedHealth Group Inc. were dragging on
the Dow
(http://www.marketwatch.com/story/unitedhealths-stock-slump-exacts-nearly-30-point-toll-on-dow-industrials----but-ibms-rally-caps-loss-2019-07-18),
despite reporting better-than-expected quarterly profits, while
raising its revenue outlook for the year. Shares in the health care
giant have risen 17.6% during the last three months.
How are other markets trading?
The yield on the 10-year U.S. Treasury edged down to 2.03%.
In commodities markets, the price of U.S. crude oil fell nearly
3.0% to $55.30 per barrel, its lowest level in a month, while gold
was up 1% around $1,437.80 after seeing a new six year highs this
month.
The U.S. dollar index , meanwhile, was off 0.42% at 96.82.
In Asia, stocks closed lower, with the China CSI 300 shedding
1%, Japan's Nikkei 225 tumbling 2% and Hong Kong's Hang Seng index
retreating 0.5%. In Europe, stocks were edging lower, with the
Stoxx Europe 600 down 0.1%.
(END) Dow Jones Newswires
July 18, 2019 16:15 ET (20:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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