Thursday January 17th

17-01-2019

Dow futures point to a 100-point decline at the open after Morgan Stanley earnings miss estimates

U.S. stock index futures fell on Thursday after Morgan Stanley’s latest quarterly results disappointed investors. Wall Street also grappled with uncertainty around the Chinese economy. At 7:25 a.m. ET, Dow Jones Industrial Average futures were down 107 points, indicating a decline of 132.16 points at the open. S&P 500 and Nasdaq 100 futures also pointed to losses at the open. Futures fell to near their lows of the session after Morgan Stanley reported earnings and revenue that fell short of Wall Street estimates. Morgan Stanley shares dropped more than 4 percent in premarket trading. Morgan Stanley’s report comes a day after blockbuster earnings from Goldman Sachs and Bank of America. Goldman rose more than 9 percent on Wednesday, its biggest one-day gain in 10 years, while Bank of America climbed more than 7 percent. Citigroup, J.P. Morgan Chase, and Wells Fargo also reported quarterly earnings this week. American Express and Netflix are scheduled to report after the close Thursday. Netflix’s earnings will arrive after the streaming giant announced it would raise monthly subscription prices by 13 to 18 percent, a move that was cheered by Wall Street earlier this week. Thursday’s moves come after the major indexes posted solid gains in the previous session, lifted by the sharp gains in Goldman and Bank of America. Concerns over China appeared to weigh on sentiment Thursday. China’s central bank made its biggest ever daily net cash injection via reverse repo operations, pumping $82.73 billion into the banking system. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth. Recent data has shown signs of weakness in China’s economy, a sensitive issue as Beijing tries to resolve its trade dispute with the Trump administration over the course of a 90-day tariffs truce. The two countries have targeted each other’s economies with new duties on billions of dollars’ worth of imports. The number of Americans applying for jobless benefits through state unemployment programs fell slightly in mid-January to a five-week low, though more furloughed federal workers sought temporary financial help. Initial jobless claims, a rough way to measure layoffs, declined by 3,000 to 213,000 in the seven days ended Jan. 12. Economists polled by MarketWatch had forecast a 220,00 reading. Asia Pacific shares traded mixed on Thursday, despite strong quarterly earnings in the U.S. and after the U.K. government won a parliamentary confidence vote. Worries over China likely weighed on market sentiment. Japan’s Nikkei 225 erased early gains of near 0.3 percent to close down 40.48 points, or 0.2 percent, at 20,402.27 while the Topix index added 5.43 points, or 0.35 percent, to 1,543.2. In South Korea, the Kospi also gave up early advances to close near flat. Markets in the Greater China region were mostly down: Hong Kong’s Hang Seng Index fell about 0.5 percent in late-afternoon trade. On the Chinese mainland, the Shanghai composite index fell 0.42 percent while the Shenzhen composite and Shenzhen component indices declined around 0.9 percent each. Oil prices fell on Thursday as U.S. crude production neared an unprecedented 12 million barrels per day just as worries about weakening demand emerge. U.S. West Texas Intermediate crude futures were at $51.25 per barrel around 7:50 a.m. ET (1250 GMT), down $1.06, or 2 percent, from their last settlement. International Brent crude oil futures were down 99 cents, or 1.6 percent, at $60.33 per barrel. Spot gold fell 0.04 percent at $1,292.92 per ounce and U.S. gold futures were down 0.1 percent at $1,292.50. “Gold is looking for the next short-term stimulus ... On the next occasion we see a sustained equity market pull-back, you’re likely to see a movement above $1,300,” Capital Economics analyst Ross Strachan said.