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Weak Morgan Stanley results, trade worries to pull Wall St. lower at open

Kitco News

(Reuters) - Wall Street’s main indexes were set to retreat from one-month highs on Thursday, hit by Morgan Stanley’s weak results and renewed concerns over the progress of Sino-U.S. trade talks.

Shares of the Wall Street investment bank (MS.N) tumbled 4.3 percent after reporting a lower-than-expected quarterly profit as increased volatility at the end of the fourth quarter hurt its fixed income trading.

Sentiment was already weak after U.S. lawmakers introduced bills on Wednesday to ban the sale of U.S. chips or other components to Huawei Technologies Co Ltd [HWT.UL] or other Chinese telecoms firms that violate U.S. sanctions or export control laws.

Investors worried that the action against Huawei, which drew sharp criticism from China, could further complicate trade talks between Washington and Beijing ahead of Chinese Vice Premier Liu He’s visit to Washington later this month.

“Concerns about trade policy has been simmering there for a while,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“There has been some chatter of a bigger impact of the government shutdown. It is really escalating and could be pose a threat to economic expansion.”

The U.S. government shutdown over President Donald Trump’s call for Congress to fund a wall he promised to build on the U.S.-Mexican border entered its 27th day.

At 8:45 a.m. ET, Dow e-minis 1YMc1 were down 0.24 percent. S&P 500 e-minis ESc1 were down 0.21 percent and Nasdaq 100 e-minis NQc1 were down 0.09 percent.

Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), the world’s largest contract chipmaker, forecast its sharpest quarterly revenue fall in a decade, joining other technology and semiconductor companies to warn of a slowdown in global smartphone demand.

Shares of Intel Corp (INTC.O), Nvidia Corp (NVDA.O) and Texas Instruments Inc (TXN.O) fell between 0.3 percent and 1.5 percent, while Apple Inc’s (AAPL.O) shares fell 0.4 percent.

Netflix Inc (NFLX.O), the first member of the FAANG group to report results after the bell on Thursday, dipped 0.2 percent. The video-streaming pioneer raised U.S. subscription rates earlier this week.

The S&P 500 .SPX stands 12 percent away from its Sept. 20 record close, after hitting a 20-month low in December on concerns over a global economic slowdown.

Analysts have cut their expectations for S&P 500 companies’ fourth-quarter profit growth to 14.3 percent from the 20.1 percent forecast on Oct. 1, per IBES data from Refinitiv.

Easing some concerns over the domestic economy, latest data showed the number of Americans filing applications for jobless benefits unexpectedly fell last week, pointing to sustained labor market strength.

Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva

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