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Sluggish mood on Wall St as earnings season kicks off; financials drop

Reuters / 11 Oct 17 | 09:08 PM

A souvenir license plate is seen outside the New York Stock Exchange in Manhattan, New York. Photo: Reuters

Wall Street's main indexes were little changed at open on Wednesday, as a jump in shares of consumer staples were offset by a drop in financials on the eve of their financial reports.

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Kroger rose nearly 7 percent after the grocery chain said it would explore a potential sale of its convenience stores business.

That led the consumer staples index up 0.36 percent. But those gains were offset by a 0.5 percent drop in financials.

Wall Street banks JPMorgan Chase and Citigroup both report on Thursday. But, analysts warn bank results will be held back by a lack of volatility compared to a year ago.

"Third quarter results of large banks are expected to be tepid," said Stephen Biggar, an analyst at Argus Research. "Trading revenue (will be) down due to low volatility and loan growth remaining flat to slightly negative."

With the S&P 500 up 14 percent in 2017, investors are betting on strong earnings growth across the S&P 500.

"It's only a question of valuations if they've gotten a little bit ahead of themselves, even though the earnings story remains positive," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"Time will tell."

At 9:36 a.m. ET, the Dow Jones Industrial Average was up 4.04 points, or 0.02 percent, at 22,834.72, the S&P 500 was down 0.73 points, or 0.03 percent, at 2,549.91 and the Nasdaq Composite was down 4.12 points, or 0.06 percent, at 6,583.13.

The dollar dipped to a 12-day low on worries that a feud with influential Tennessee Senator Bob Corker would undermine President Donald Trump's efforts to pass tax changes.

Fed Ahead

Of interest will be minutes, due at 2:00 p.m. ET (1800 GMT), of the Federal Reserve's September policy meeting, when it left interest rates unchanged but signaled one more hike was still on the cards by the end of 2017.

Worried by signs the U.S. economy had peaked, the Fed has slowed since raising rates twice within three months at the start of this year.

"There may not be any new information, but the market will be susceptible to any sort of negative headline that might come out," Brown said.

Seven of the 11 major S&P indexes were higher.

General Electric slipped about 1 percent after JPMorgan said a dividend cut was "increasingly likely" and cut its price target on the stock.

J&J rose 1.5 percent after Jefferies upgraded the stock to "buy".

Micron Technology dipped 1.17 percent after launching a $1 billion stock offering to cut debt.

Advancing issues outnumbered decliners on the NYSE by 1,414 to 1,007. On the Nasdaq, 1,144 issues fell and 1,076 advanced.

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