ASX Set to Edge Higher as Wall Street Takes a Breather

US stock indexes were seen drifting in the market today following a mixed bag of earnings reports from key companies, including Morgan Stanley and UnitedHealth Group.

The S&P 500 saw a modest rise of 0.1% during afternoon trading after experiencing fluctuations between slight gains and losses. The Dow Jones added 28 points or 0.1%, whereas the Nasdaq composite fell by 0.2%. In Australia, the sharemarket is anticipated to open slightly higher, with futures indicating a potential rise of 14 points, or 0.2%. On Thursday, the ASX rose significantly by 1.4%.

Wall Street's Status Quo

Wall Street is currently marking time after a notable surge the previous day. Investors are reacting with caution as recent reports about inflation raise hopes that the Federal Reserve might consider reducing interest rates more aggressively this year. In the bond market, Treasury yields showed little change following mixed economic signals.

Recent data revealed that sales growth at US retailers was slower than anticipated last month. Additionally, more US workers applied for unemployment benefits this past week, but a third report indicated a surprising return to growth in manufacturing within the mid-Atlantic region.

These mixed reports suggest that while the US economy does not appear to be on the brink of recession, it may be showing signs of a slowdown that could help relieve inflationary pressures. Recent weeks have seen markets reacting rapidly to new economic data, causing investors to continuously adjust their expectations regarding potential moves by the Federal Reserve.

The Impact of Inflation Reports

As reports alleviate concerns regarding inflation, expectations for rate cuts often increase, usually leading to lower Treasury yields and higher stock prices. Conversely, when inflation concerns re-emerge—whether due to a robust economy or potential policy impacts from President-elect Donald Trump—Treasury yields tend to climb, and stock prices generally decline.

As of Thursday’s trading session, Treasury yields maintained a steady course. The yield on the 10-year Treasury note decreased to 4.61% from 4.66% late Wednesday. Throughout the morning, this yield fluctuated but stayed well below the 4.79% mark observed earlier in the week.

The two-year Treasury yield, which is more closely aligned with feed-back regarding potential shifts in Federal Reserve policy, dipped to 4.23% from 4.27% late Wednesday, down from 4.37% just two days prior.

Earnings Reports from Major Players

On Wall Street, Morgan Stanley enjoyed a boost of 2.8% after surpassing earnings expectations for the latest quarter. CEO Ted Pick noted improvements in investment banking during this period. Additionally, strong financial markets contributed to an increase in total client assets to $7.9 trillion across their wealth and investment management sectors.

Other banks like Citigroup, Goldman Sachs, and Wells Fargo also reported earnings that exceeded analyst forecasts, providing a positive backdrop for the sector.

Bank of America posted a profit report on, but its stock remained subdued, dropping 1.6%. In contrast, US Bancorp faced significant losses, with a 5.6% decrease after poorly received quarterly results.

UnitedHealth Group fell 4.6%, even after reporting stronger-than-expected profits, due to revenue figures that fell short of expectations. This was notable as it marked the first financial report since a tragic event involving one of their executives in early December.

International Market Movements

Meanwhile, international markets showed a more positive trend, with indexes in Europe and Asia largely reporting gains. France’s CAC 40 jumped 2.1%, while South Korea’s Kospi and Hong Kong’s Hang Seng both added 1.2%.

In the technology sector, Taiwan Semiconductor reported a remarkable 57% increase in profits last quarter, driven in part by the growing demand for artificial intelligence technology. Their stock rose by 5.3%, positively influencing US chip manufacturers as well, with KLA and Lam Research gaining 8% and 7.8%, respectively.

ASX, WallStreet, Earnings