Dipo Olowookere
By Investors Hub
The major U.S. index futures have climbed off their worst levels of the morning but currently continue to point to a modestly lower opening on Thursday following the strength seen on Wall Street over the two previous sessions.
A negative reaction to quarterly results from Morgan Stanley (MS) may generate early selling pressure, with the financial giant down by 3.7 percent in pre-market trading.
Morgan Stanley is likely to see initial weakness after reporting fourth quarter earnings and revenues that came in below analyst estimates.
Renewed trade concerns may also weigh on Wall Street after a report from the Wall Street Journal said federal prosecutors are pursuing a criminal investigation of China?s Huawei Technologies for allegedly stealing trade secrets from U.S. partners.
However, the futures regained ground following the release of a report from the Philadelphia Federal Reserve showing a significant acceleration in the pace of growth in regional manufacturing activity in the month of January.
Stocks moved mostly higher over the course of the trading day on Wednesday, adding to the gains posted on Tuesday. With the continued upward move, the major averages reached their best closing levels in a month.
The major averages ended the day in positive territory but well off their highs of the session. The Dow climbed 141.57 points or 0.6 percent to 24,207.16, the Nasdaq rose 10.86 points or 0.2 percent to 7,034.69 and the S&P 500 edged up 5.80 points or 0.2 percent to 2,616.10.
The continued strength on Wall Street partly reflected a positive reaction to upbeat earnings news from financial giants Bank of America (BAC) and Goldman Sachs (GS).
Shares of Bank of America moved sharply higher trading after the company reported fourth quarter results that beat analyst estimates on both the top and bottom lines.
Goldman Sachs also saw substantial strength after reporting fourth quarter earnings and revenues that exceeded expectations.
Buying interest was somewhat subdued, however, as traders continued to express uncertainty about the ongoing government shutdown.
Stocks remained mostly positive after British Prime Minister Theresa May’s government survived a vote of no confidence in parliament.
The U.K.’s House of Commons defeated the motion raised by the leader of the main opposition Labour party Jeremy Corbyn by a vote of 325 to 306. The no-confidence vote came a day after May’s Brexit deal was voted down 432 to 202.
The Federal Reserve also released its Beige Book this afternoon, with the report saying economic activity has continued to increase in most of the U.S. but also hinting at a deterioration in optimism.
The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, said eight of the twelve districts reported modest to moderate growth.
Looking ahead, the Beige Book said outlooks generally remained positive, although many districts reported that contacts had become less optimistic.
The drop in optimism reflected increased financial market volatility, rising short-term interest rates, falling energy prices, and elevated trade and political uncertainty.
In other U.S. economic news, the Labor Department released a report showing another steep drop in import prices in the month of December, reflecting a continued nosedive in fuel prices
The Labor Department said import prices tumbled by 1.0 percent in December after plunging by a revised 1.9 percent in November.
Economists had expected import prices to plummet by 1.3 percent compared to the 1.6 percent slump originally reported for the previous month.
The report said export prices also fell by 0.6 percent in December after sliding by a revised 0.8 percent in November. The drop in export prices matched economist estimates.
A separate report from the National Association of Home Builders showed an unexpected improvement in homebuilder confidence in January.
The report said the NAHB/Wells Fargo Housing Market Index rose to 58 in January after slumping to 56 in December. Economists had expected the index to come in unchanged.
The notable decrease seen in the previous month dragged the housing market index down its lowest level since hitting 54 in May of 2015.
Financial stocks turned in some of the market’s best performances on the day following the results from industry giants Bank of America and Goldman Sachs.
Reflecting the strength in the financial sector, the NYSE Arca Broker/Dealer Index and the KBW Bank Index surged up by 2.9 percent and 2.5 percent, respectively.
Notable strength was also visible among steel stocks, resulting in a 1.1 percent advance by the NYSE Arca Steel Index.
On the other hand, computer hardware stocks came under considerable selling pressure, dragging the NYSE Arca Computer Hardware Index down by 1.9 percent.
