US open: Risk of federal government shutdown looms over stocks
Wall Street is trading on the back foot ahead of a House vote on the legislation needed to avert a government shutdown and amid another leg lower in the Treasury market, amid reports that Apple might unload some of its holdings of US government debt to pay its tax bills.
Simmering in the background perhaps, Reuters reported the White House was contemplating levying a large fine against China in response to allegations of intellectual property theft by that country's firms.
At 1521 GMT, the Dow Jones Industrials Average was trading off by 0.25% or 64.75 points to 26,051.51 and the S&P 500 by 0.13% to 2,798.98, although on Wednesday both gauges had hit fresh record highs.
Significantly, some reports indicated that Republicans in the House of Representatives were facing a bit of a revolt from members of the Freedom Caucus which might endanger passage of a short-term spending bill needed to keep the US federal government open.
Complicating matters, early on Thursday, President Trump tweeted that he was opposed to making concessions on child healthcare in order to gain the backing of lawmakers from the other side of the aisle, with Democrats having already said that what they wanted was a fix for DACA, or the Deferred Action for Childhood Arrivals programme which the White House had recently promised to axe.
In parallel, the yield on the benchmark 10-year US Treasury note was moving higher by two basis points to 2.61%, having come within a whisker of their 2017 highs earlier in the session.
GKFX analyst David Morrison said: "Even the most cursory look at charts of the US majors shows the explosive move higher since the beginning of the month. Even the wobble earlier this week was completely erased by yesterday’s price action. Obviously the big question is just how much further can this rally go?
"The answer is that for now, every piece of market news or economic data is used to justify further buying. One day that will change and the resulting sell-off will be ugly. But it's impossible to forecast when that time will come, even if reduced monetary stimulus may prove to be the trigger."
On the economic front, traders were surprised by a 41,000 person drop in initial US jobless claims for the week ending on 13 January (consensus: 250,000), the reference week for the next monthly employment report.
Banks were still firmly in focus, with Morgan Stanley off a touch even after its quarterly earnings beat expectations despite a hit to trading revenues. The bank posted adjusted earnings of $0.84 a share versus expectations of $0.77.
Bank of New York Mellon was in the spotlight too as it posted a 37% jump in fourth-quarter profit and recorded an estimated net benefit of $427m from the new US tax system. Yet traders sent its shares duly lower.
Stock in aluminium giant Alcoa was another big drag, sliding after its fourth-quarter net loss widened to $1.06 a share from $0.68 one year ago, mainly due to the closure and sale of some of its smelting assets.
Elsewhere, La Quinta Holdings rallied as it agreed for hotel operator Wyndham WorldWide to buy its hotel franchise and management business for $1.95bn in cash.
Still to come, IBM and American Express are slated to report after the markets close.