US open: Investors shrug-off positive data, Morgan Stanley dives
By Alexander Bueso
Date: Thursday 17 Jan 2019
(Sharecast News) - US stocks are hugging the flat-line on Thursday, amid fresh concerns about Sino-US relations and fresh allegations of improper conduct against President Donald Trump from one of his one time lawyers, Michael Cohen, offset by surprisingly positive economic data.
At 1502 GMT, the Dow Jones Industrial Average was off by just 0.0% or 17.21 points at 24,189.36, alongside a 0.05% or 1.25 point advance on the S&P 500 to 2,616.93, while the Nasdaq Composite was up 0.04% or 3.26 points to 7,037.95.
From a sector standpoint, the biggest losses were being seen in Home Improvement Retailers (-1.95%), Brewers (-1.87%) and Investment Services (-1.30%).
"With the U.S government shutdown and the U.K's Brexit standoff ongoing, coupled with the drawn-out Sino-U.S trade situation, there are enough reasons in play for investor market caution," said Dean Popplewell, Vice President of Market Analysis at Oanda.
According to Bloomberg, an indictment in the ongoing federal investigation linked to a 2014 lawsuit alleging the theft of T-Mobile technology by its Chinese rival, Huawei, could come soon.
"It goes right to the heart of the unresolved IP issues with China. China is unlikely to shrug this off which is creating a risk-off environment," said London Capital Group analyst Jasper Lawler, adding that signs of retaliation from China could see stocks sink further.
In parallel, the Journal reported that past Trump associate, Michael Cohen, had accused the President of directing him to pay a technology outfit to try and fix early 2016 online presidential polls in his favour.
Meanwhile, the government shutdown was entering its 27th day, with no end in sight as President Trump and the Democrats remained at odds over funding for his Mexico border wall.
Despite the ongoing shutdown, US jobless claims for the week ending on 12 January declined by 3,000 to 213,000 (consensus: 220,000), the US Department of Labor said, surprising many economists.
The Federal Reserve bank of Philadelphia's regional manufacturing index hit a reading of 17.0 for January, which was up from December's print of 9.1 (consensus: 10.0).
Nevertheless, economists believed that activity in the country's manufacturing sector was set to slow over the course of 2019.
"The recent lower trend in sentiment indexes suggests that manufacturing activity still continues to grow (indexes remain above 0), but at a markedly slower pace than the last couple of years. We expect real business fixed investment growth to slow to 3.9% in 2019, roughly half its estimated 6.8% rate in 2018, as a moderation in investment growth seems more likely than an outright contraction," said Mickey Levy at Berenberg Capital Markets.
On the corporate front, shares of Morgan Stanley were trading sharply lower after the investment bank reported that both its earnings and revenues fell short of analysts' estimates in the fourth quarter.
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