Off The Wire
Wall Street set for flat open following Trump's key speech
(Reuters) - Wall Street was set to open flat on Wednesday as investors evaluated developments around U.S.-China trade talks ahead of the March deadline and President Donald Trump’s State of the Union address which offered no specific economic policy initiatives.
At the State of the Union address on Tuesday, the President outlined his political priorities for the year and reiterated his vow to build a wall along the U.S.-Mexico border. His reference to the Feb. 15 deadline for a budget deal also reminded investors that a second shutdown was not fully off the table.
“There is no enthusiasm following last night’s State of the Union message and the reason for that is investors are worried about political fighting and that is concerning,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Investors are focusing on earnings and the next big thing, that is trade. Before the March deadline, there will be some positive news on trade, whether its a trade deal, a partial trade deal or an extension of trade talks.”
U.S. Treasury Secretary Steven Mnuchin told CNBC there was progress in U.S.-China trade talks, but a lot of work still needed to be done ahead of another round of meetings next week between the world’s largest economies to push for a deal before the March 2 deadline.
The strong rally in stocks has been supported by optimism regarding a possible U.S.-China trade truce, the Federal Reserve’s signal of ending its monetary policy tightening and a largely positive earnings season.
About 71 percent of more than half of the S&P 500 companies that have reported earnings have topped profit expectations, according to IBES data from Refinitiv.
The benchmark S&P 500, which has notched five straight days of gains, now stands about 7 percent away from its record closing high in September, after having fallen about 20 percent from that level last year.
At 8:53 a.m. ET, S&P 500 e-minis were up 0.05 percent. Dow e-minis were up 0.07 percent and Nasdaq 100 e-minis were up 0.24 percent.
Videogame makers were among the biggest losers with Electronic Arts Inc sliding 15.2 percent in premarket trading after cutting its yearly revenue outlook, while Take-Two Interactive Software Inc slumped 9.0 percent after its forecasts for fourth-quarter and full-year adjusted revenue disappointed investors.
Activision Blizzard Inc also fell 5.9 percent.
Capri Holdings Ltd, formerly Michael Kors, jumped 9.5 percent on posting better-than-expected holiday-quarter profit and on raising its full-year revenue forecast.
Walt Disney Co rose 1.2 percent after the company topped Wall Street estimates helped by its booming theme park business and growth at its ABC broadcast network.
Snap Inc jumped 21.9 percent after the company said the number of people using its Snapchat app would remain at current levels this quarter, easing worries it would continue to lose users to rival Facebook Inc’s Instagram.
Latest data showed November U.S. trade deficit dropped 11.5 percent to $49.3 billion amid declines in imports of cellphones and petroleum products.
Also on deck is Fed Chairman Jerome Powell’s address at 7:00 p.m. ET (0000 GMT) in Virginia.
Reporting by Medha Singh in Bengaluru; Additional reporting by Amy Caren Daniel; Editing by Shounak Dasgupta