The rollout of big bank earnings bolstered early action on the stock market today, with Goldman Sachs, PNC Financial Services Group (PNC) and Bank of America among the banks reporting early Wednesday. Airline stocks rallied behind United Continental, after its earnings report late Tuesday.
The Dow Jones industrial average stepped up 0.6%, with Goldman Sachs setting up an easy early lead.
The S&P 500 climbed 0.4%. United Continental and Bank of American stock held the index’s top gains. Nordstrom (JWN) dropped to the bottom of the list.
Nasdaq Pierces Resistance, Can It Hold?
The Nasdaq punched through its 50-day moving average and into the 7,000 range Tuesday, a positive sign for the market’s confirmed uptrend. Stronger trading volume would have made it a more decisive move. But even a narrow rise above the line in weak trade is better than deflecting lower, which is what had happened on Thursday and on Dec. 4.
The test now is whether the index — now up 5.9% for the year and tracking toward its strongest month since January 2018 — can hold that line of support. The release of the Federal Reserve’s January Beige Book report, scheduled for 2 p.m. ET today, could have some effect on the stock market today.
The Dow Jones industrial average ended Tuesday up 3.2% so far in January and a bit more than 1% from its 50-day line. The S&P 500 is ahead 4.1%, and less than 1% below the 50-day level.
Goldman Sachs, Bank Of America Stock
Dow Jones stock Goldman Sachs muscled up 5% after topping fourth-quarter earnings and revenue expectations. Bank of America stock rumbled nearly 6% higher as fourth-quarter revenue and earnings comfortably topped analyst targets, and the bank’s efficiency ratio surged 432 basis points to 58%. Wednesday’s gain put Bank of America stock down about 12% from an August high.
PNC Financial slumped 1.9% in early trade, as both earnings and revenue came in short of analysts’ fourth-quarter estimates.
In U.K., May Faces Vote Of Confidence
Markets showed little reaction to Tuesday’s Brexit plan failure in London. But stocks in the UK trded lower as Prime Minister Theresa May faced a parliamentary vote of confidence, called by the opposition Labour party following Tuesday’s broad defeat of May’s Brexit plan. May appears to have cobbled together enough support to survive the pending vote, which would stave off a turnover in British leadership. Britain’s deadline for exiting the European Union arrives March 29.
Frankfurt’s DAX shed early losses and gained 0.2%, while the CAC-40 in Paris moved 0.4% higher in afternoon trade. London’s FTSE 100 had trimmed early losses to 0.4%.
In Asia, Hong Kong’s Hang Seng Index rose 0.3% Wednesday, while the Shanghai Composite ended its session flat. In Japan, Tokyo’s Nikkei 225 slumped 0.6%.
Fiserve Buys First Data; Teradata Upgraded
Payment processor First Data soared more than 18% after Fiserve agreed to an all-stock takeover valued at $22 billion. A Kohlberg Kravis Roberts & Co. affiliate controls 35% of First Data’s common stock, and has agreed to vote in favor of the combination. The companies expect the deal to close in the second half of 2019. Fiserve shares dropped nearly 6%, and ended Tuesday down not quite 9% from a September high.
Data warehousing and analytics leader Teradata jumped 2.4% in opening action. The Dayton, Ohio-based tech stock earned an upgrade to overweight, from equal weight, from Morgan Stanley. The note also lifted Teradata’s price target more than 30%, to 55.
Teradata shares are up 21% from an October low, climbing the right side of a possible seven-month base. Shares ended Tuesday 6% below a potential buy point at 44.37.
Among IBD 50 stocks, Alarm.com scrambled 2.9% higher in early trade. The image sensor and smart home software specialist is trading less than 5% below a 60.30 buy point in a cup base.
Shutdown: 25 Days
The budget impasse between the White House and House Democrats enters its 26th day with the Trump administration ordering almost 50,000 furloughed federal employees to return to work. The workers — primarily those who work with tax returns, airport security and safety and food and drug inspections — will continue to work on an unpaid basis.
Democrats continue to pursue bills that would fund and reopen government offices, some on a temporary basis, without an agreement on the $5.7 billion in border wall funding, which Trump has made a prerequisite to any budget agreement. That leaves the standoff largely where it began on Dec. 22.
The IBD/TPP Economic Optimism Index slipped to its lowest level in more than 12 months in early January, on concerns over the government shutdown.
United Leads Airlines Rally
United Airlines swung more than 6% higher, after a 67% earnings-per-share gain and an 11% rise in earnings topped analyst estimates. The carrier guided for a zero to 3% unit revenue gain in the first quarter, and first-quarter earnings of $1 a share, besting analysts’ targets.
United shares are pulled back in a test of support at their 40-week moving average in a possible basing pattern.
American Airlines leapt 3.1%. Delta Air rose 1.4%. Delta reported mixed results late Tuesday, and said it had lost $25 million in revenue this month because fewer government contractors have been traveling.
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