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Stocks rose on Wednesday as Wall Street cheered strong quarterly results from Morgan Stanley and CSX. The Dow Jones Industrial Average rose 79.40 points to close at 25,199.29, with UnitedHealth and American Express outperforming. The S&P 500 climbed 0.2 percent to 2,815.62 as financials rose 1.5 percent. The Nasdaq Composite closed marginally lower at 7,854.44. Morgan Stanley shares rose 1.8 percent after the company reported better-than-expected earnings and revenue for the previous quarter, boosted by strong trading and investment banking revenue. Bank of America, Citigroup, and J.P. Morgan Chase all closed higher as well. After what appeared to be a slow start for the bank earnings, it does appear that they are building back on the momentum they had when rates were starting to break out. CSX also posted stronger-than-forecast profits and sales, sending its shares higher by 7.1 percent. Its gains propelled the industrials sector to a 1.1 percent rise and sent the Dow Transports up by 2.3 percent. United Continental also surged 8.8 percent on stronger-than-expected earnings. American Express, eBay and IBM are among the companies scheduled to report earnings after the close.
Wall Street has high hopes for this earnings season, with analysts at FactSet expecting S&P 500 earnings to have grown by 20 percent in the second quarter. With just over 9 percent of S&P 500 companies having released their latest quarterly results, earnings have grown 22.1 percent. The gains in banks and industrials offset a mixed performance by some of the popular large-cap tech names. Netflix fell 1.2 percent, slipping for the second day in a row after posting weaker-than-expected subscriber growth for the previous quarter. Amazon shares fell 0.1 percent after Prime Day concluded.
U.S. housing starts fell 12 percent in June to a nine-month low, the Commerce Department said. The percentage drop was also the biggest since November 2016. According to Bespoke Investment Group, it was the biggest miss relative to expectations since January 2007. Mortgage applications also fell 2.5 percent last week. Home building stocks fell on the back of the data. The iShares U.S. Home Construction exchange-traded fund (ITB) dropped 0.3 percent, as KB Home fell 2.2 percent. The data come after an upbeat assessment on the U.S. economy from Federal Reserve Chairman Jerome Powell. The head of America’s central bank also downplayed the impact of global trade risks on the outlook for future rate hikes. The economic growth could reach 4 percent foe for a quarter or two.
BUY MORGAN STANLEY AT: 50.52, TAKE PROFIT AT: 51.47, STOP LOSS AT: 50.04