Stocks fall after Morgan Stanley earnings miss estimates

Stocks fell on Thursday after Morgan Stanley’s latest quarterly results disappointed investors. Wall Street also grappled with uncertainty around the Chinese economy.

The Dow Jones Industrial Average fell 81 points at the open as Home Depot and Caterpillar lagged. The S&P 500 dipped 0.27 percent, led by losses in financials, industrials and energy. The Nasdaq Composite pulled back 0.4 percent.

Morgan Stanley reported earnings and revenue that fell short of Wall Street estimates. The company’s results were dragged down by poor performances in its trading and wealth management businesses. Morgan Stanley shares fell 4 percent.

Citigroup, J.P. Morgan Chase, and Wells Fargo also reported quarterly earnings this week. American Express and Netflix are scheduled to report after the close Thursday. Netflix’s earnings will arrive after the streaming giant announced it would raise monthly subscription prices by 13 to 18 percent, a move that was cheered by Wall Street earlier this week.

Thursday’s moves come after the major indexes posted solid gains in the previous session, lifted by the sharp gains in Goldman and Bank of America. The major indexes also came with solid gains for the week, having risen at least 0.8 percent.

“Upside should now prove limited for global indices, with S&P likely to start to weaken and pullback and any strength would face strong overhead resistance between 2630-40,” said Mark Newton, managing member at Newton Advisors, in a note.

“Indices have moved between 10-15% in the last 15 trading days since Christmas Eve, and have finally reached the 50% retracement levels (or fractionally below) from the decline from September/October,” he added. “Structurally this area remains difficult as several lows were made at this area and now offer resistance on this rally.”

Concerns over China appeared to weigh on sentiment Thursday. China’s central bank made its biggest ever daily net cash injection via reverse repo operations, pumping $82.73 billion into the banking system. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth.

Recent data has shown signs of weakness in China’s economy, a sensitive issue as Beijing tries to resolve its trade dispute with the Trump administration over the course of a 90-day tariffs truce. The two countries have targeted each other’s economies with new duties on billions of dollars’ worth of imports.

– CNBC’s Saheli Roy Choudhury and David Reid contributed to this report.

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