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By Barbara Kollmeyer and Anora M. Gaudiano, MarketWatch
Delta reports stronger-than-expected results
U.S. stocks resumed their climb into record territory on Thursday, a day after the S&P 500 and Nasdaq suffered the first down day of the year on anxieties about appetite for Treasurys from the world’s second-largest economy, China.
Investors shrugged off weaker-than-expected jobless claims and wholesale inflation data. Wall Street also is gearing up for the start of fourth-quarter earnings, which could provide a definitive catalyst for investors after what has mostly been a strong start to 2018.
What are stock futures doing?
The S&P 500 index was up 9 points, or 0.3%, to 2,756 with nearly all of the 11 main sectors trading higher. Energy and industrials shares were leading the gains, up 1.1% and 0.8% respectively. The benchmark index traded above its previous closing high.
The Nasdaq Composite Index advanced 19 points, or 0.3%, to 7,173, setting a new intraday high.
The Dow Jones Industrial Average meanwhile, added 93 points, to 25,462, a rise of 0.4%. The blue-chip index also recorded an intraday all-time high.
What is driving the markets?
Optimism about earnings growth and the potential windfall from lower corporate tax rates have been fueling equity market gains, according to analysts.
Investors have also brushed aside a rapid increase in bond yields. China’s foreign-exchange regulator on Thursday dismissed a Bloomberg News report suggesting Beijing is looking to pare back on U.S. bond buys as “fake news.” (http://www.marketwatch.com/story/china-regulator-says-report-country-wants-to-pare-us-bonds-may-be-fake-news-2018-01-11) The yield on the 10-year benchmark note was trading at 2.56% (http://www.marketwatch.com/story/10-year-yields-slide-from-march-high-as-china-rebuffs-report-on-paring-us-bond-buys-2018-01-11) on Thursday, rising for a sixth consecutive sessions.
Bond yields move inversely to prices.
A downturn in bond prices had already been under way before the China buying concerns, with investors anticipating that corporate tax cuts and other pro-business measures could encourage the Federal Reserve to lift rates faster than expected, driving investors out of bonds, lifting yields higher.
Read:Why U.S. inflation data will be a litmus test for bond buyers (http://www.marketwatch.com/story/why-us-inflation-data-will-be-a-litmus-test-for-bond-buyers-2018-01-09)
Investors are also gearing up for earnings season, which kicks in Friday when JPMorgan Chase & Co.(JPM), BlackRock, Inc.(BLK) and Wells Fargo & Co.(WFC) are scheduled to report.
What are strategists saying?
“While today’s jobless claims number was somewhat disappointing, investors are focusing on the aggregate number, which continues to suggest that the labor market is in a good shape and that inflation is rising but not too fast,” said Lisa Erickson, head of traditional investments for U.S. Bank Wealth Management.
“We are hopeful that companies will use the tax windfall for capital investments and not on dividends and buybacks as they had done in the past. But what they actually do with the money is the billion dollar question,” Erickson said.
What are other markets doing?
Stocks in Asia mostly steadied (http://www.marketwatch.com/story/asia-pacific-stocks-take-a-dive-on-weaker-us-dollar-2018-01-10), though Japan’s Nikkei 225 index bucked that trend with a loss of 0.3%.
In Europe, stocks were headed for a second day of losses (http://www.marketwatch.com/story/european-stocks-head-for-2nd-day-of-losses-with-retail-shares-in-the-red-2018-01-11), with the Stoxx 600 index trading slightly lower.
Oil prices hit fresh three-year highs (http://www.marketwatch.com/story/oil-prices-log-3-year-highs-before-trump-issues-iran-sanction-decision-2018-01-11) ahead of a U.S. decision on whether it will waive or reimpose sanctions on Iran this week. The West Texas Intermediate February contract was last up 0.6%.
Gold inched higher, while the dollar fell (http://www.marketwatch.com/story/dollar-rebounds-as-china-calls-report-of-slowing-us-bond-buys-fake-news-2018-01-11). The ICE dollar index declined 0.4% to 92.007, with losses stemming primarily from the euro.
In cryptocurrencies, the bitcoin spot price dropped nearly 10% to $13,448.12, after a report South Korea would ban trading off all digital currencies (http://www.marketwatch.com/story/bitcoin-tumbles-on-reports-south-korea-will-ban-all-trading-2018-01-11). Bitcoin futures on the CME Group Inc. lost 5.3% to $13,680. Ripple coins slipped 4% to $1.81, according to CoinMarketCap.com data.
Which stocks are in focus?
Delta Air Lines Inc.(DAL) rose 1.2% after posting better-than-expected fourth-quarter results and raising its 2018 outlook.
Shares of Xerox Corp.(XRX) jumped 4.5% after The Wall Street Journal reported that the company is in talks to potentially do a major deal with Japan’s Fujifilm Holdings Corp (http://www.marketwatch.com/story/xerox-said-to-be-discussing-major-deal-with-fujifilm-2018-01-10). as the U.S. document pioneer struggles to reinvent itself.
Shares of Eastman Kodak Co.(KODK) fell 13%. The stock is up nearly 200% so far this week after an announcement earlier in the week that it is launching a cryptocurrency (http://www.marketwatch.com/story/kodak-boards-the-blockchain-bandwagon-2018-01-09) and would begin a “major blockchain initiative.”
Tractor Supply Company(TSCO) shares fell 3.2% after analysts at Wedbush cut the stock to neutral from outperform.
Opinion:Kodak’s monster gains show there’s a killing to be made by trading blockchain news (http://www.marketwatch.com/story/kodaks-monster-gains-show-theres-a-killing-to-be-made-by-trading-blockchain-news-2018-01-10)
DST Systems Inc. (DST) rose 5% after the information processing and servicing company agreed to be bought by SS&C Technologies Holdings Inc.(SSNC) in a deal valued at $5.4 billion, including debt (http://www.marketwatch.com/story/dst-systems-stock-jumps-after-buyout-deal-with-ssc-technologies-2018-01-11).
What economic data and Fed speakers are ahead?
Initial weekly U.S. jobless claims (http://www.marketwatch.com/story/jobless-claims-hit-nearly-4-month-high-at-start-of-2018-2018-01-11), a tool to measure layoffs, climbed by 11,000 to a nearly four-month high of 261,000 and well above the 248,000 forecast of economists surveyed by MarketWatch.
Meanwhile, U.S. producer-price index fell 0.1% in December. The core PPI, excluding food and energy, rose 0.1%. The PPI climbed 2.6% in 2017 (http://www.marketwatch.com/story/us-wholesale-inflation-in-2017-hits-6-year-high-2018-01-11), its biggest increase since 2011.
St. Louis Fed President James Bullard (http://www.marketwatch.com/story/feds-bullard-shift-to-price-level-targeting-not-realistic-yet-2018-01-10) (http://www.marketwatch.com/story/feds-bullard-shift-to-price-level-targeting-not-realistic-yet-2018-01-10)said adoption of price-level targeting by the Fed “is not realistic in the near term.” Under price-level targeting, a central bank commits to keeping the price level on a path defined by a 2% inflation rate.
(END) Dow Jones Newswires
January 11, 2018 10:43 ET (15:43 GMT)
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