Dow Jones Industrial Average trades modestly higher

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January 15, 2019 12:52pm INDEXDJX:.DJI NYSE:DIA

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From Mark Decambre: U.S. stocks traded modestly higher midday Tuesday, as investors digested lackluster results from major U.S. banks, including Dow component JPMorgan Chase, and news of new stimulus measures out of China.

How are major benchmarks faring?

The Dow Jones Industrial Average DJIA, +0.66% rose 67 points, or 0.3%, to 23,973, while the S&P 500 index SPX, +1.02% rose 17 points, or 0.7%, to 2,600. The Nasdaq Composite Index NQH9, +2.04% advanced 82 points, or 1.2%, to trade at 6,988.

What’s driving the market?

The mood on Wall Street was dampened by JPMorgan Chase & Co’sJPM, +1.04% fourth-quarter earnings report, which showed the financial behemoth delivering results that fell below consensus analysts’ estimates for both profit and revenue. The disappointing earnings come on the heels of Citigroup’s weaker-than-expected results, which were fueled by a poor showing in fixed income and currency trading, and may raise concerns about the vitality of the U.S. economy or banks’ ability to deal with volatility.

Bank results tempered earlier optimism driven by an announcement by the People’s Bank of China that it would increase efforts to spur their economy by improving credit availability for smaller companies and a pledge by the Chinese Ministry of Finance to cut taxes and ramp up infrastructure spending.

The comments come a day after the world’s second-largest economy delivered trade data that were poorer-than expected, underlining worries that the country’s economy was locked in a downturn that could weight on global expansion amid a protracted tariff spat between China and the U.S.

Separately, investors were also watching an important U.K. parliamentary vote on Prime Minister Theresa May’s plan to stage an orderly divorce from the European Union by a March 29 deadline. May faces a likely defeat on her Brexit plan that is likely to inject volatility in local markets and potentially among countries that do business with the United Kingdom.

What are strategists saying?

J.P. Morgan’s earnings miss was similar to Citigroup’s on Monday, in that it was driven by a large decline in its capital markets operations, rather than lending to households or corporations, Axel Pierron, managing director of capital markets management consulting firm Opimas, wrote in a Tuesday-morning note. “The situation is strongly attributable to market conditions, notably in the bond market,” he wrote.

“Beijing revealed plans to cut income tax for small businesses in a bid to stimulate the economy. The latest move by the Chinese authorities indicates how keen they are to cushion the slowdown in economic activity,” wrote David Madden, market analyst at CMC Markets UK, in a Tuesday research note. “Dealers in Europe are a little on the optimistic side this morning, and U.K. politics will be in focus this evening as parliament will vote on Theresa May’s Brexit deal, but it seems to be very unpopular,” he wrote.

What data and Fed speakers are ahead?

Wholesale inflation fell 0.2% in December, driven by lower gasoline prices. Year-over-year, prices paid by businesses for inputs rose 2.5%, unchanged from last month and down from a seven-year peak of 3.4% last July.

The Empire State index, which tracks manufacturing activity in New York state, fell a sharp 7.6 points to 3.9 in January, according to the New York Fed. That’s well below the reading of 12 expected by economists, according to a survey by Econoday.

Tuesday will also feature commentary from several Federal Reserve officials. At 11:30 a.m., Minneapolis Fed President Neel Kashkari was scheduled to deliver a speech; at 1 p.m. Dallas Fed president Rob Kaplan will participate in a Q&A and Kansas City Fed President Esther George will give a speech at 1:15 p.m. George is the only voting member of the Fed’s rate-setting committee, among the three.

Which stocks are in focus?

Neflix Inc. shares NFLX, +6.73%  jumped 6.1% after the video-streaming company said it would raise U.S. prices by 13% to 18%, the biggest rise since launching its streaming service 12 years ago.

Shares of UnitedHealth Group IncUNH, +3.16% rose 2.8%, after the health insurer reported better-than-expected profit and revenue.

Shares of Wells Fargo & CoWFC, -1.19%  retreated 2.3%, after fourth-quarter profit came in below expectations.

J.P. Morgan shares fell 0.5% Tuesday

Shares of Delta Air Lines IncDAL, +0.19% fell 1.3%, even after the company posted better-than-expected fourth-quarter earnings, while meeting Wall Street expectations for revenue.

Sherwin-Williams CoSHW, -4.08% stock fell 5.2% early Tuesday, after the company warned that full-year profits have fallen short of guidance and analyst expectations.

Shares of Blue Apron Holdings Inc. rose 28%, after the meal-kit company predicted it would reach profitability on an adjusted-Ebitda basis in the first quarter and full year 2019.

Shares of CVS Health CorpCVS, -1.67% are in focus, after the firm saidWalmart IncWMT, +1.16% has decided to leave the CVS Caremark pharmacy benefit management (PBM) commercial and Managed Medicaid networks.

How did the benchmarks fare yesterday?

On Monday, the Dow slid 86.11 points, or 0.4%, to end at 23,909.84, while the S&P 500 index fell 13.65 points, or 0.5%, to 2,582.61. The Nasdaq Composite Index dropped 65.56 points, or 0.9%, to close at 6,905.92.

How are other markets trading?

Asian markets closed broadly higher on Tuesday, with Japan’s NikkeiNIK, +0.96% rising 1%, Hong Kong’s Hang Seng HSI, +2.02% index adding 2% and The Shanghai Composite SHCOMP, +1.36% index advancing 1.4%.

In Europe, were modestly higher, with the Stoxx Europe 600 SXXP, +0.35% and the FTSE 100 UKX, +0.58% edging higher

Crude oil CLG9, +2.67% was on the rise Tuesday, up 1.7% and adding to the 13.2% increase in prices since the beginning of the year. Gold GCG9, -0.26%prices were 0.2% higher at $1,294 per ounce, while the U.S. dollar DXY, +0.64%was rising 0.2%.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $240.86 per share on Tuesday afternoon, up $1.92 (+0.80%). Year-to-date, DIA has declined -1.83%, versus a -1.99% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of MarketWatch.

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