Stocks struggled in narrowly mixed trade at Wednesday's open, as weak housing data, falling oil prices and early earnings news factored into early action.
XUnited Airlines (UAL), railroad CSX (CSX) and chip-equipment maker ASML Holding (ASML) were among the early winners on strong earnings news. Morgan Stanley (MS) also climbed after reporting an earnings beat. Housing stocks were under pressure after some weak June data, and markets looked toward a second day of testimony from Federal Reserve Chief Jerome Powell. Google-parent Alphabet (GOOGL) held in a buy range as investors gauged the impact of a $4.7 billion fine from the European Union.
The Dow Jones industrial average and Nasdaq composite both wrestled with a fractional declines. The S&P 500 inched up in early trade.
Goldman Sachs (GS) led the Dow. Clorox (CLX) fell to the bottom of the S&P 500 on an analyst downgrade. Netflix (NFLX) and China names NetEase (NTES) and Baidu (BIDU) all dropped more than 1%, putting pressure on the Nasdaq.
Powell, Part 2; Dollar Gains; Oil Prices Fall
Federal Reserve Chairman Jerome Powell is up for a second day of testimony in Washington, beginning at 10 a.m. ET, this time before the House Financial Services Committee. Powell told the Senate on Tuesday that the economy continues to signal increasing strength, keeping the Fed on track to gradually increase interest rates. Powell said it was too soon to determine whether changes in U.S. trade relationships might have an impact on that strategy.
The dollar was on the rise following Powell's comments Tuesday, pressuring stocks and commodities. U.S. bench mark oil fell 1%, trading below $68 per barrel and testing support at the 100-day level, which has marked the limit of its pullbacks since February.
Housing starts dropped sharply in June, the Commerce Department reported, down 12% to an annualized pace of 1.173 million. That was down from May's rate of 1.34 million starts, undercutting economist expectations for a dip to 1.32 million and marking a 12-month low.
Building permits also declined, to a pace of 1.27 million, down from 1.3 million in May and below forecasts for a rate of 1.29 million.
Overseas, China's markets lost ground Wednesday as the yuan marked its biggest drop in two weeks. The Shanghai Composite shed 0.4%. Hong Kong's Hang Seng Index dipped 0.2%. In Japan, Tokyo's Nikkei 225 rose 0.4% — adding a fourth day to its rally as exporters rallied on a sinking yen and a new trade deal with the European Union.
Europe's markets regained strength in afternoon trade. Frankfurt's DAX jumped 0.8%. The FTSE 100 in London climbed 0.7%.
Boeing Climbs; Alphabet In Buy Range; CSX Eyes Breakout
Boeing shares flattened in early trade after Dow Jones quoted an Airbus (EADSY) executive saying that airlines were reluctant to place orders due to global trade unease. Still, Boeing reported that new orders continued rolling in during the U.K.'s Farnborough Airshow. Vietnam-based VietJet ordered 100 737 Max aircraft in a deal valued at $12.7 billion. Boeing shares are up in eight of the past nine sessions, trading 5% below a 378.58 buy point in a base-beside-a-base pattern.
Morgan Stanley muscled up more than 3%. Second-quarter earnings jumped 49% on a 12% revenue gain, both above analyst targets. Management also announced a $4.7 billion share-buyback initiative to begin at the start of the third quarter. The investment bank's shares have been declining since March.
Alphabet slipped 0.3%, largely holding its ground after European Union regulators levied a $5 billion antitrust penalty. The decision held that its Google unit had taken unfair advantage of its dominant Android smartphone operating system to promote mobile apps and other services. Alphabet shares remain in a buy range, above a 1,201.59 buy point.
Netherlands-based ASML Holdings surged more than 5% as second-quarter sales and earnings easily cleared consensus views. The chip-equipment maker said it shipped four extreme ultraviolet systems during the quarter, and expected to ship 20 during 2018, as chipmakers prepared to move to next-generation chips. The gain put ASML just below a new high, in a five-week consolidation that is not yet a valid base.
United Airlines spiked 8% higher as its Q2 results outpaced expectations in a second straight quarter of earnings and revenue growth. United reported late Tuesday that its earnings popped 17%; revenue rose 8%. The stock is trading below a 79.10 buy point in a six-month saucer base.
Other airlines got the memo. Delta Air Group (DAL) and American Airlines (AAL) each jumped 4.3%. Southwest Airlines (LUV) gained nearly 2%. JetBlue (JBLU) gained 2.9% and Alaska Air (ALK) jumped 4%.
Railroad CSX rumbled ahead 5.5% as analysts raised price targets after a strong second quarter. Revenue rose 6%, earnings surged 58%, both above expectations. Operating income surged 20% during the quarter as coal shipments rose 7%, vs. a 1% decline in merchandise. The gain marked a breakout above a 67.79 buy point in a five-week flat base.
Texas Instruments (TXN) shares traded flat after the company announced the immediate resignation of President and Chief Executive Brian Crutcher, due to code of conduct violations. Chairman Rich Templeton was named to assume the president and CEO roles. "Templeton's appointment is not temporary, and the board is not searching for a replacement," according to the company's statement.
RELATED:
The Big Picture: 3 Reasons Why Tuesday Was A Win For Bulls
Dow Futures: Google Fights To Hold Buy Zone After $5 Billion EU Fine
United Airlines Hikes Outlook; Q2 Earnings, Sales Top Estimates
Yield Curve Warning: The Trump Fed Is Wrong For Trumponomics
American Express, ASML, Alcoa, eBay Top Key Earnings Due: Action Plan
IBD Stock Of The Day Nears New Buy Point After Nearly Tripling
