Daily Market Color

Stocks Fluctuate with Corporate Earnings, Political Concerns

Latest Government Shutdown Deadline Looming

This Friday marks the deadline by which US lawmakers need to agree on either finalizing the government budget or at least reaching another short-term funding extension, in order to avoid a potential government shutdown.  Immigration policy remains one of the most controversial topics being thrown into the budget showdown, with President Trump’s reported derogatory comments about emigrants from certain countries further complicating the process.  Other unresolved issues related to immigration policy include the Trump administration’s desire for the [US] funding of a wall along the Mexico border in addition to the elimination of the visa lottery system.  At this point in time, an agreement to temporarily fund the government through February 16th seems like the most likely outcome.  Looking ahead, Republicans will need the support of at least nine Democrats in order to successfully pass a spending bill.



Notable Quarterly Earnings Updates

Citigroup, Inc. (+0.5%):  Adjusted earnings per share of $1.28 vs. $1.19 expected, largely offset by a one-time $19 billion write-down resulting from the recalculation of residual tax asset value after the new tax cuts.

General Motors Company (+0.7%):  Improved guidance reported, with 2018 earnings expected to remain in-line with those of 2017 and 2019’s profits expected to rise.

UnitedHealth Group, Inc. (+2.5%):  Improved guidance reported, with 2018 EPS projection revised more than 16% higher as a result of the new tax cuts.



Overall, all three major US stock indices are trading 0.1%-0.3%  lower on the day, reversing strong gains from earlier in the session which resulted in new intraday record highs, including the DJIA crossing the 26,000 mark for the first time ever.  Declines in the energy sector weighed on equities, as WTI crude oil declined almost 1% to $63.70/barrel.  Gold futures similarly trended lower, posting their first losing session (-0.1%) in a week. The largest movements were observed in the cryptocurrency markets, where Bitcoin declined as much as 20% throughout the day, driven by concerns of increased regulation in China and Europe.  In bond markets, Treasurys held within a tight range, with the yield on the 10-year note poised to finish the session unchanged at 2.54%.


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