Wall St set for fresh highs on trade deal, Morgan Stanley earnings

(Reuters) – U.S. stocks were poised to open at record highs on Thursday, after the United States and China signed an initial trade agreement and Morgan Stanley wrapped up big bank earnings on a strong note.

The benchmark S&P 500 .SPX was set to open above 3,300 mark for the first time ever. The blue-chip Dow Jones Industrial Average .DJI and the Nasdaq .IXIC were also on track to open at new all-time highs.

Wall Street bank Morgan Stanley (MS.N) rose 6.5% in premarket trading after beating quarterly profit estimates and raising its performance goals.

Investors took heart from the signing of the trade deal on Wednesday that paused an 18-month long tariff war that had bruised financial markets and crimped global growth.

China is expected to boost purchases of U.S. goods and services in exchange for the rolling back of some tariffs as part of the deal, but concerns remain with several thorny issues still unresolved.

“The Phase 1 trade deal has been largely priced into markets,” said Peter Kenny, founder of Strategic Board Solutions LLC.

“Any movement forward from here, at least in the near-term, is going to be driven by earnings. So far, we do see a sort of a positive tone set by the financials.”

Analysts expect earnings at S&P 500 companies to have dropped 0.5% in the fourth quarter, according to Refinitiv IBES data, the second consecutive decline.

At 8:52 a.m. ET, Dow e-minis 1YMcv1 were up 86 points, or 0.3%. S&P 500 e-minis EScv1 were up 10.75 points, or 0.33% and Nasdaq 100 e-minis NQcv1 were up 35.75 points, or 0.39%.

Shares of semiconductor stocks, including Micron Technology Inc (MU.O) and Advanced Micro Devices Inc (AMD.O), were up about a percent after a promising outlook from the world’s top contract chipmaker TSMC (2330.TW) (TSM.N) pointed to a recovery in the chip sector.

Data from the Commerce Department showed U.S. retail sales rose 0.3% in December, in-line with expectations.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2020. REUTERS/Brendan McDermid

The numbers follow disappointing holiday sales reports from retailers including Target Corp (TGT.N) and J.C. Penney Co Inc (JCP.N) spooked investors.

Signet Jewelers Ltd (SIG.N) jumped 33.8% after raising 2020 adjusted earnings estimate on the back of upbeat holiday sales.

Tesla Inc (TSLA.O) fell 4.4% after Morgan Stanley downgraded the stock to “underweight” from “equal weight”.

Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila

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