Dow Jones Industrial Average inches higher awaiting bank earnings tomorrow

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How are benchmarks faring?

The Dow Jones Industrial Average DJIA, -0.17% rose 44 points, or 0.2%, higher at 26,301, the S&P 500 index SPX, -0.10% rose 4 points to 2,892, a rise of 0.1%, while the Nasdaq Composite Index COMP, -0.18% fell 8 points, or 0.1% to 7,956.

What’s driving markets?

Investors are treading carefully ahead of a first-quarter earnings season that begins in earnest Friday, with reports due from two of the nation’s largest banks: JPMorgan Chase & Co. JPM, +0.48% and Wells Fargo & CoWFC, -0.47% which could provide clues on the health of the U.S. economy and its banking sector.

With analysts projecting S&P 500 earnings to fall 4.2% from the first quarter of last year, according to FactSet, market participants may be wary of making broad bets before getting a peek at first quarter results, and more important, hearing from management on their outlooks for the year ahead.

WFC, -0.47% Market participants are also wrestling with growing signs of anemic growth throughout the world, which could eventually deflate appetite for assets perceived as risky like stocks, as indexes teeter near all-time highs after a stellar start to 2019.

Minutes from the Federal Reserve show that policy makers last month dropped plans for further rate increases in 2019 due to unease over the U.S. and global economies, though some members of the rate-setting Federal Open Market Committee didn’t rule out a rate increase toward the end of the year.

Despite worries about the future path of economic growth, the state of the U.S. labor market remains strong, as evidenced by a Thursday report showing that new applications for jobless benefits hit a fifty-year low. The strength of the American jobs market is often pointed to by stock-market bulls who argue the U.S. consumer-led economic expansion has more room to run.

Overall, concerns about slowing growth have led to a dovish tilt for global central banks, including the European Central Bank, which Wednesday reiterated its view that risks in the eurozone remain tilted to the downside. ECB President Mario Draghi citing trade tensions as one key headwind for healthier economic expansion in the region.

Treasury Secretary Steven Mnuchin on Wednesday said that China and the U.S. have agreed on an enforcement mechanism for their potential trade deal, suggesting one of the key stumbling blocks for an accord had been cleared. The Wall Street Journal also reported that Chinese officials may be willing to make further concessions in its negotiations, sweetening an offer to open its cloud-computing sector to foreign rivals.

Meanwhile, European Union leaders agreed to postpone Brexit until Oct. 31 to allow British Prime Minister Theresa May more time to try to get the U.K.’s Parliament to approve the country’s divorce deal.

What economic data and fed speakers are in focus?

New applications for jobless benefits fell to 196,000 in the week ended April 6, the lowest number in 50 years, the Labor Department said Thursday.

Wholesale prices rose 0.6% in March, versus February, faster than the 0.3% increase expected by economists polled by MarketWatch. The Labor Department’s PPI index also showed that core wholesale prices, which strip out volatile food and energy prices, was flat for the month.

Federal Reserve Vice Chairman Richard Clarida, in a speech to the Institute of International Finance, said incoming economic data show U.S. growth is “slowing somewhat,” while inflationary pressures have been “muted.”

New York Fed President John Williams gave a keynote address at a housing development conference in New York City

St. Louis Fed President James Bullard told the Community Development Foundation of Tupelo, Mississippi that the campaign to “normalize” Fed interest rate policy “has been largely successful.” He added, “Nominal short-term interest rates have been raised from near-zero levels, and the size of the Fed’s balance sheet has been reduced as the economic expansion has continued.”

What are strategists saying?

Financial stocks are outpacing the market Thursday, “which has something to do with the Fed signalling that it doesn’t foresee any rate cuts this year,” a concern for banks whose earnings can be negatively impacted by low rates in the form of lower margins on loans, Lindsey Bell investment strategist at CFRA Research told MarketWatch.

Despite good news on the labor market and U.S. China trade talks, the market remains rangebound following the S&P 500’s more-than 15% rally year-to-date, she added. “The market is trading at a premium to the historical average,” she said. “We see a little bit of upside from here for the rest of the year, but you’ll see volatility throughout the course of earnings season, for sure.”

“More progress was made in U.S./China trade talks, according to the WSJ, and a deal is imminent, but the market already assumes that so it didn’t cause a rally,” Tom Essaye, president of the Sevens Report wrote in a Thursday note to clients.

“The minutes last night showed that some policy makers would be keen to hike rates should the economy improve, and that took some traders by surprise as they thought a rate hike in 2019 was off the table. In a way, it was typical of the Fed to give themselves some wiggle room,” wrote David Madden, market analyst at CMC Markets UK, in a daily research note.

Which stocks are in focus?

Shares of JPMorgan and Wells Fargo are in focus ahead of the release of quarterly results due Friday. Shares of JPMorgan were up 1.1%, while Wells Fargo stock climbed 0.4% early Thursday.

Financial stocks in general are outpacing the rest of market, with the sector up 0.8%, as measured by the Financial Select Sector SPDR Fund XLF, +0.30% versus a 0.2% rise for the S&P 500.

International Business Machines IncIBM, +0.15% stock rose 0.2% Thursday morning, after Credit Suisse analyst Matthew Cabral initiated coverage of the company with a $173 price target and an outperform rating.

Dow Jones Industrial Average (DJI) was trading at $287.86 per share on Thursday morning, down $0.43 (-0.15%). Year-to-date, DJI has gained 8.30%, versus a % rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of MarketWatch.