Wall Street to Set to Open Down Despite Strong Morgan Stanley Results

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Despite the major mainland Europe indices flat into the afternoon, staging a recovery from mid-morning after starting down and sliding further, Wall Street still looks like that it will open Tuesday down on Friday’s closing levels. With markets closed yesterday as a result of the Martin Luther King holiday, today is the first session of the week. Dow Jones futures are currently showing that it will open 0.22% down after it was the only 1 of the 3 major indices to show a loss on Friday, down 0.9%. S&P futures are also indicating a lower start, by 0.39%, while the Nasdaq looks like it will begin the week around 0.4% in the red.

The main company news as the markets open today is the positive Q4 results posted by Morgan Stanley. Mirroring the trend that peers posting their results on Friday benefitted from, Morgan Stanley took full advantage of postelection trends to achieve strong trading profits. A profit of $1.67 billion, 81 cents a share, was achieved, compared to $908 million, 39 cents a share, for Q4 of 2015. The result comes in as the best Q4 profit in 10 years but still missed a target set by James Gorman, the bank’s Chief Executive. Futures are showing that Morgan Stanley’s share price is around 1.5% up pre-open.

Elsewhere, British American Tobacco will take full ownership of Reynolds American Inc., of which it already owns 42.2%. The remaining 57.8% will be acquired in an $49.4 billion cash and stock deal which the American company’s board has accepted.

The main piece of economic data due to be released today is the Federal Reserve of New York’s Empire State Manufacturing survey for January, which has just come out showing a disappointing reading. Economists had been predicting a January reading of 8. The actual reading came in at 6.5 and December’s estimated 9 has been revised down to 7.6. The main cause of the decline was new orders, which dropped to 3.1 in January from 10.4 in December. Shipments showed a reading of 7.3, down from December’s 8.6 and both employment indices remained negative.

Attention will also be paid today to talks given by New York Federal Reserve Bank President William Dudley, his San Francisco equivalent John Williams and Fed Governor Lael Brainard. Dudley will address Retail’s Big Show 2017 on the topic: “Evolving Consumer Behavior: A view from the Federal Reserve Bank of New York.”

Williams will provide a keynote address to the Sacramento Business Review Economic Forecast and Brainard will speak to the Brookings Institute on the impact of fiscal policy on monetary policy.

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