Stocks extended their recent rally, pushing the S&P above 3,300 for the first time, amid a mostly upbeat start to the corporate earnings season and following the inking of the U.S.-China trade agreement. Banks have been first up in terms of sectors to report and Morgan Stanley (MS) capped off a good week for the group with a very strong report, sending its shares higher.
ECONOMIC EVENTS: In the U.S., retail sales tracked estimates with a 0.3% December gain for the headline figure and a firm 0.7% gain excluding autos. Initial jobless claims fell 10,000 to 204,000 in the week ended January 11. Import prices increased 0.3% in December with export prices falling 0.2%. The Philly Fed manufacturing index jumped to 17.0 in January, after dropping to a 6-month low of 2.4 in December. The NAHB housing market index dipped 1 point to 75 in January. The November U.S. business inventory report tracked estimates with a 0.2% headline inventory drop.
In trade news, Reuters reported that the U.S. Senate has cleared an overhaul of the North American Free Trade Agreement that includes tougher labor and automotive content rules but leaves $1.2T in annual U.S.-Mexico-Canada trade flows mostly unchanged. The legislation for the U.S.-Mexico-Canada Agreement passed on an 89-10 bipartisan vote, sending the bill to the Oval Office for President Trump to sign into law, according to Reuters.
TOP NEWS: Shares of Morgan Stanley rose 6.6% after the firm reported better than expected earnings and revenue in the fourth quarter. CEO James Gorman said the bank delivered strong quarterly earnings across all of its businesses, highlighting that "firmwide revenues were over $10B for the fourth consecutive quarter."
Shares of Tesla (TSLA) fell 1% after Morgan Stanley analyst Adam Jonas downgraded the stock to Underweight, a sell-equivalent rating, following the 105% rally over the last four months. Additionally, Tesla's overall vehicle registrations nearly halved in California during the fourth quarter, Reuters' Akanksha Rana wrote, citing a Dominion Cross-Sell report, which collates data from state motor vehicle records.
Shares of XPO Logistics (XPO) jumped 15% this morning after the company confirmed plans to explore strategic alternatives, including a sale of the company or spinoff of one or more business units. Chairman and CEO Bradley Jacobs said in an interview with The Wall Street Journal that Goldman Sachs and JPMorgan have been "mandated to run four simultaneous auction processes" for XPO's European transportation and supply chain units, its supply chain business in the Americas and the Asia-Pacific regions and the company’s North American transportation unit, excluding the less-than-truckload business. "We may not sell all four, we may sell none," Jacobs added.
Southwest Airlines (LUV) announced that the airline is proactively removing the Boeing (BA) 737 MAX from its flight schedule through June 6 based on "continued uncertainty around the timing of MAX return to service."
Meanwhile, Microsoft (MSFT) shares were 1.8% higher after the company announced a plan to reduce and ultimately remove its carbon footprint, setting a goal to be carbon negative by 2030. The company added that it will be launching a new $1B climate innovation fund to "accelerate the global development of carbon reduction, capture, and removal technologies."
Additionally, Bloomberg reported that DuPont (DD) is considering a divestiture of its electronics business. The company is working with advisers to examine strategic options for the unit, including a sale or spinoff, according to Bloomberg.
MAJOR MOVERS: Among the noteworthy gainers was Spirit Airlines (SAVE), which rose 7.5% after providing CASM and TRASM guidance for the fourth quarter. Also higher was Signet Jewelers (SIG), which surged 40.2% higher after reporting quarterly results.
Among the notable losers was Bombardier (BDRBF), which dropped 32.1% in New York trading after the company gave a profit warning amid rail contract issues. Also lower was Alcoa (AA), which fell 11.9% after reporting quarterly results.
INDEXES: The Dow rose 267.42, or 0.92%, to 29,297.64, the Nasdaq gained 98.44, or 1.06%, to 9,357.13, and the S&P 500 advanced 27.52, or 0.84%, to 3,316.81.
