Stocks pop on strong Philly Fed and jobless claims data; Netflix reports after the close

Earning season is picking up and stocks were initially lower after poor results from Morgan Stanley, but those losses were erased after strong US economic data.

Early in New York, S&P 500 futures were pointing to a lower open after Morgan Stanley fourth quarter results disappointed, coming nowhere near the blockbuster results we saw yesterday with Goldman Sachs or Bank of America.  Morgan Stanley profit came in at $0.73, a 17-cent miss, while revenue fell to $8.55 billion, much lower than the analysts’ forecast of $9.44 billion. Some are shrugging off the poor numbers and attributing them to the additional risk they took in the fourth quarter.  Morgan Stanley’s bread and butter is equity trading and that came in at $1.93 billion much lower than $2.01 billion eyed.  Overall the poor results painted a different picture than what the other major banks reported this week.

US stocks reversed earlier losses after the release of Philadelphia business outlook.  The January release came in at 17.0, above the forecast range of 0.0 to 13.0.  New orders also rose from 13.3 to 21.3.  Jobless claims also posted strong results with 213,000, better than the expected 220,000 and prior reading of 216,000.  Treasuries also fell, as the yield on the 10-year rose from 2.71 to 2.7325.  The dollar is little changed to the euro and yen, but seeing declines with the British pound.

The momentum in stock buying however ran out of steam and was unable to take out yesterday’s high.  The next major earning’s release will come after the close when Netflix reports.

Price action on the S&P 500 index shows the recent rally is facing resistance from the 50-day SMA, which currently trades at 2,626.  If we see a daily close above that level, further upside could target the 2,700 region.  Major resistance remains the 2,750 level.  To the downside, 2,550 could provide initial support followed by 2,475.

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