Dow, S&P poised for record high on strong earnings

July 20, 2016 08:51 AM

Wall Street was set to open higher today, with the Dow and S&P 500 on track to hit fresh records, as results from Morgan Stanley and Microsoft helped spur optimism about corporate earnings.

Microsoft was up 5.3% at $55.90 in premarket trading after its results handily beat expectations, ahead of a raft of earnings from other tech behemoths.

Morgan Stanley was up 3% at $29.05 after its profit topped analysts' estimates, rounding off upbeat results from the six biggest Wall Street banks.

While the stock market has been on a record-settling rally, investors have been keeping a sharp eye on corporate earnings to see if they can help sustain the momentum.

A mixed bag of earnings reports and lowered expectations for global economic growth yesterday pulled the S&P 500 back from record highs. The Dow ended about three points shy of a record.

"For the rally to sustain we are going to need to see continued improvement in the earnings and economic activity," said Peter Cardillo, chief market economist at First Standard Financial in New York.

E-mini Dows were up 51 points, or 0.28%, with 24,122 contracts changing hands at 8:25 a.m. ET. That set the Dow on track for its ninth straight day of gains.

E-mini S&P 500s were up 5 points, or 0.23%, with 153,407 contracts traded.

E-mini Nasdaq 100s were up 12.75 points, or 0.28%, on volume of 20,979 contracts.

Second-quarter earnings for S&P 500 companies are now expected to fall by 4.3%, less than the 4.5% decline estimated earlier, according to Thomson Reuters.

Intuitive Surgical was up 6.6% at $716 after the medical device maker's profit beat estimates.

Intel, eBay and American Express are scheduled to report results after the bell.

The dollar eased after hitting a four-month high as positive U.S. housing data yesterday spurred bets that the U.S. Federal Reserve may raise interest rates at the end of the year.

Cardillo said investors should be prudent at current stock levels, given the uncertainty following Britain's vote to leave the European Union and other ongoing geopolitical concerns.

The International Monetary Fund cut its global growth forecasts for the next two years yesterday, citing uncertainty after the Brexit vote.

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