A positive earnings reaction for MS is helping lift SPX futures
After barreling to new record highs on Wednesday, the U.S. stock market looks set for a slow start. Blue chips appear ready to continue this week's outperformance, though, with futures on the Dow Jones Industrial Average (DJI) trading above fair value. And while the S&P 500 Index (SPX) is modestly higher in pre-market trading on a positive earnings reaction for Morgan Stanley (MS), the tech sector is under pressure, with futures on the Nasdaq-100 Index (NDX) in the red.
Traders are also reacting to an early round of economic data, including a bigger-than-expected drop in housing starts in December and a 45-year low in weekly jobless claims. D.C. will remain in focus, too, with a House vote on a short-term spending bill to avert a government shutdown expected as soon as today.
Continue reading for more on today's market, including:
- Another sign stock market bears are in hiding.
- Call buyers found a bargain on this beaten-down restaurant stock.
- Barclays thinks this tech stock is headed to record highs.
- Plus, Walmart eyes record highs, Alcoa's big miss, and $2 billion buyout buzz.
5 Things You Need to Know Today
- The Chicago Board Options Exchange (CBOE) saw 1.29 million call contracts traded on Wednesday, compared to 619,137 put contracts. The single-session equity put/call ratio fell to 0.48, while the 21-day moving average dipped to 0.55.
- Wal-Mart Stores Inc (NYSE:WMT) stock is pointed 1.9% higher ahead of the bell, and could reach a record high out of the gate, after Goldman Sachs upgraded the big-box retailer to "buy" from "neutral." The brokerage firm added Walmart stock to its "Conviction Buy" list, and waxed optimistic on higher consumer spending and wage growth following the GOP tax bill.
- Alcoa Corp (NYSE:AA) reported quarterly earnings and revenue that fell short of expectations, as production was hit by a drought in Brazil. AA stock was up nearly 6% year-to-date before the aluminum producer reported earnings, but is headed for an 8% drop out of the gate, after closing last night at $56.99.
- La Quinta Holdings Inc (NYSE:LQ) shares are up 11.1% in electronic trading, and should touch a new two-year high, after Wyndham Worldwide Corporation (NYSE:WYN) agreed to buy the company's hotel management business for $1.95 billion in cash. LQ stock was already chugging higher before the announcement, touching a two-year peak of $19.74 yesterday after an upgrade to "overweight" at Morgan Stanley.
- The Philadelphia Fed business outlook survey, weekly crude inventories, and the Fed's balance sheet are due out today. American Express (AXP), IBM (IBM), BB&T (BBT), JB Hunt (JBHT), and KeyCorp (KEY) will report earnings.
Chinese Economy Growth Boosts Asian Stocks
Stocks in Asia closed mostly higher following a big round of economic data out of China. Specifically, numbers showed the Chinese economy grew more than expected over the past year, marking the first year-over-year increase in seven years. Plus, industrial production topped expectations in December, but retail sales for the same month fell short of forecasts. By the close, the Shanghai Composite was up 0.9%, and the Hang Seng ended up 0.4% after touching an all-time high earlier in the session. In Japan, the Nikkei flirted with another 26-year high and topped the 24,000 level, but the index reversed course by the close to fall 0.4%. Meanwhile, the Kospi ended fractionally higher.
It's so far been a mixed session in Europe. Technology stocks were among the top performers, as were mining stocks, which got a lift from the upbeat data out of China. These gains are being overshadowed by sharp losses from real estate stocks, however, while Associated British Foods PLC also faces headwinds. As such, the FTSE 100 is down 0.5% and the French CAC 40 is essentially flat. The German DAX, on the other hand, is enjoying a 0.3% lead.