By Clive McKeef
UnitedHealth's 2.3% stock drop weighs on the Dow
U.S. stocks closed higher Thursday, recovering from early losses, after New York Federal Reserve President John Williams said the central bank's wisest strategy is to cut interest rates at the first sign of economic distress when interest rates are already low.
How are the major benchmarks performing?
The Dow Jones Industrial Average ended up 3.12 points at 27,222.97, the S&P 500 rose 10.69 points, or 0.4%, to finish at 2,995.11 and the Nasdaq Composite Index ended 22.04 points, or 0.3%, lower at 8,207.24.
All three benchmarks halted a two-session skid.
Separately, the Dow Jones Transportation Average finished 1.3% higher on the day, recovering some of its 3.6% slump from the previous session.
What's driving the market?
Investors bid stocks slightly higher following comments from Williams. "When you have only so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress," he said, in a speech at a research conference in New York .
Stocks rebounded from morning losses, and bond yields slipped, as did the U.S. dollar in the wake of what investors saw as confirmation of an interest cut at the Fed's next policy meeting.
Thursday is the last day for Fed policy makers speeches before the so-called blackout period for comment by officials ahead of the FOMC meeting July 30-31.
Meanwhile, investors are still monitoring corporate earnings though and concerned about the lack of progress in resolving the U.S. China trade dispute.
To date, about 12% of S&P 500 index companies have reported quarterly results this earnings season and 84% have reported better-than-expected earnings, according to FactSet data.
"The big question for investors this quarter is how much import tariff costs are reflected in analysts' earnings estimates," John Lynch, Chief Investment Strategist at LPL Financial said in a note.
Import tariffs on Chinese goods remained in place after President Trump's meeting with China President Xi at the G-20 Summit in Japan last month.
Stocks closed lower for a second day in a row on Wednesday after The Wall Street Journal reported (https://www.wsj.com/articles/u-s-china-talks-stuck-in-rut-over-huawei-11563393280?mod=searchresults&page=1&pos=7)that trade negotiations between the U.S. and China had faltered over restrictions on Chinese telecommunications giant Huawei, citing sources familiar with the talks.
U.S. Treasury Secretary Mnuchin, speaking on CNBC, on the sidelines of the G-7 finance ministers meeting in France said that trade talks with China are continuing apace. "Don't believe everything you read in the press," he said. Mnuchin said that he and top trade official Robert Lighthizer are set to engage in fresh talks with his counterparts in China soon.
In economic data, a survey of manufacturers in Pennsylvania, New Jersey and Delaware came in much stronger than expected at 21.8 in July, versus 0.3 in June and above expectations of 4.5, according to a MarketWatch poll of economists. New applications for jobless benefits rose 8,000 to 216,000 in the week ended July 13, but remain at historic lows.
Which stocks are in focus?
Microsoft rose in after-hours trading Thursday after the company released better-than-expected earnings results for the fourth quarter of its 2019 fiscal year. On an annualized basis revenue grew 12% in the quarter, for the ninth straight quarter of double digit annualized revenue growth.
Morgan Stanley shares rose after the bank reported second-quarter revenue and sales in the second quarter that fell less than analysts had expected but its results showed the steepest slide in trading revenue among major Wall Street banks.
Shares of Alcoa was up though the aluminum producer reported a smaller-than-expected second-quarter loss after Wednesday's close, while lowering its guidance for aluminum demand growth in 2019 due to trade tensions and macroeconomic headwinds.
International Business Machines was higher after reporting second-quarter earnings Wednesday evening that beat analyst estimates, boosted by growth in its cloud business, though revenue declined for the fourth-straight quarter.
Meanwhile, Netflix downbeat subscription results reported Wednesday night also weakened sentiment, after the streaming video giant said it lost 126,000 subscribers in the U.S. in the second quarter, the first such loss since 2011 . Shares declined 10.3% representing its worst daily percentage loss since July of 2016.
Meanwhile, shares of UnitedHealth Group Inc. were dragging on the Dow , despite reporting better-than-expected quarterly profits, while raising its revenue outlook for the year. Shares in the health-care giant rose 17.6% during the last three months.
How are other markets trading?
The yield on the 10-year U.S. Treasury edged down to 2.03%.
In commodities markets, the price of U.S. crude oil fell nearly 3.0% to $55.30 per barrel, its lowest level in a month, while gold was up 1% around $1,437.80 after seeing a new six-year highs this month.
The U.S. dollar index , meanwhile, was off 0.5% at 96.71.
In Asia, stocks closed lower, with the China CSI 300 shedding 1%, Japan's Nikkei 225 tumbling 2% and Hong Kong's Hang Seng Index retreating 0.5%. In Europe, stocks closed 0.2% lower, with the Stoxx Europe 600 down 0.1%.