US close: Markets mixed amid Fed concern over labour shortage

US stocks finished on a mixed note on Wednesday, with Morgan Stanley boosted by solid second-quarter earnings, as investors digested the latest testimony from Federal Reserve chairman Jerome Powell and some disappointing data on housing starts.

The Dow Jones Industrial Average ended the session up 0.32% at 25,199.29 and the S&P 500 was ahead 0.22% at 2,815.62, but the Nasdaq 100 fell 0.19% to settle at 7,390.13.

Appearing before the House Financial Services Committee for the second day in a row, Powell reaffirmed the Fed's plans to lift interest rates gradually, for now.

“Fed chair Jerome Powell’s second day of testimony didn’t provide too much in the way of surprises in the wake of yesterday’s positive comments, as investors look ahead to tonight’s June Beige Book, which after today’s disappointing housing starts and building permits data will be examined for other areas of possible weakness,” said Michael Hewson, chief market analyst at CMC Markets earlier.

That Beige Book showed that the fast-expanding US economy was reaching saturation point, with raw materials costs and shortages of skilled workers starting to bite.

Adding to that was the high chance of more tariffs and an escalation of tensions to an all-out trade war.

This edition of the book did carry more optimism than earlier in the year, with the Fed reporting that 11 out of the country’s 12 regions were growing at least at a ‘modest’ pace.

It was the states surrounding St Louis that lagged, claiming only ‘slight’ growth.

“Shortages were cited across a wide range of occupations, including highly skilled truck drivers, specialised construction and manufacturing workers, IT professionals and truck drivers,” the Fed said in the Beige Book.

The central bank did note that in some cases, firms refused new orders because of the lack of workers, adding that the inability to find labour had constrained growth.

In earlier economic news, figures released by the Commerce Department showed US housing starts dropped to a nine-month low in June.

Housing starts fell 12.3% to a seasonally-adjusted annual rate of 1.173m, versus expectations for a smaller drop to 1.320m and marking the biggest monthly drop since November 2016.

Meanwhile, the May rate was revised to 1.337m from 1.350m.

Single-family housing starts were down 9.1% to 858,000 from the previous month's figure, which was revised to 944,000 - the slowest rate since December.

Permits for new construction were down 2.2% from May to a seasonally-adjusted annual rate of 1.273m, falling short of consensus expectations of 1.330m.

On the corporate front, Morgan Stanley pushed 2.81% higher after its second-quarter results surpassed analysts' expectations.

Profit rose 39% from the same period a year ago to $2.44bn, beating forecasts of $2bn, while earnings per share came in at $1.30 versus expectations of $1.11 and revenue increased 12% to $10.6bn, which was about $500m above what was pencilled in.

Elsewhere, Google owner Alphabet was 0.24% weaker as it emerged that the EU will hit Google with a €4.3bn fine over how its Android operating system works.

United Continental Holdings surged 8.7% after its second-quarter earnings late on Tuesday beat estimates.

Dow Jones - Risers

American Express Co. (AXP) $102.98 2.27%
Unitedhealth Group Inc. (UNH) $255.43 2.03%
Caterpillar Inc. (CAT) $141.12 1.56%
Boeing Co. (BA) $360.33 1.16%
Travelers Company Inc. (TRV) $130.02 0.96%
JP Morgan Chase & Co. (JPM) $111.53 0.93%
Visa Inc. (V) $140.90 0.87%
Walgreens Boots Alliance, Inc. (WBA) $66.16 0.81%
United Technologies Corp. (UTX) $131.70 0.75%
International Business Machines Corp. (IBM) $144.52 0.72%

Dow Jones - Fallers

McDonald's Corp. (MCD) $157.93 -1.14%
Nike Inc. (NKE) $76.59 -1.14%
Johnson & Johnson (JNJ) $127.80 -0.98%
Microsoft Corp. (MSFT) $105.12 -0.78%
Dowdupont Inc. (DWDP) $66.59 -0.70%
Verizon Communications Inc. (VZ) $51.14 -0.58%
Apple Inc. (AAPL) $190.40 -0.55%
Procter & Gamble Co. (PG) $79.71 -0.41%
Coca-Cola Co. (KO) $45.12 -0.33%
Chevron Corp. (CVX) $121.55 -0.31%

S&P 500 - Risers

W.W. Grainger Inc. (GWW) $338.99 11.76%
United Continental Holdings Inc. (UAL) $79.02 8.73%
CSX Corp. (CSX) $69.00 7.08%
Abbott Laboratories (ABT) $64.71 4.74%
Northern Trust Corp. (NTRS) $110.69 4.68%
Berkshire Hathaway Inc. Class B (BRK.B) $200.51 4.43%
CIGNA Corp. (CI) $177.78 4.12%
KLA-Tencor Corp. (KLAC) $110.23 4.10%
United States Steel Corp. (X) $37.76 3.79%
Bank Of New York Mellon Corp. (BK) $55.64 3.61%

S&P 500 - Fallers

Clorox Co. (CLX) $129.54 -4.07%
Molson Coors Brewing Co. Class B (TAP) $64.35 -3.96%
Apache Corp. (APA) $44.46 -3.35%
DENTSPLY Sirona Inc. (XRAY) $44.24 -3.19%
AES Corp. (AES) $12.73 -3.05%
Newell Brands Inc (NWL) $26.86 -2.82%
Weyerhaeuser Co. (WY) $35.22 -2.76%
General Mills Inc. (GIS) $43.09 -2.58%
Express Scripts Holding Co (ESRX) $77.89 -2.49%
Campbell Soup Co. (CPB) $40.17 -2.41%

Nasdaq 100 - Risers

CSX Corp. (CSX) $69.00 7.08%
Asml Holdings N.V. (ASML) $217.90 6.64%
KLA-Tencor Corp. (KLAC) $110.23 4.10%
Mercadolibre Inc. (MELI) $369.35 2.65%
American Airlines Group (AAL) $38.37 2.65%
Lam Research Corp. (LRCX) $181.32 2.30%
Applied Materials Inc. (AMAT) $48.28 2.07%
Marriott International - Class A (MAR) $133.13 2.05%
Biogen Inc (BIIB) $358.51 0.99%
Fastenal Co. (FAST) $56.44 0.89%

Nasdaq 100 - Fallers

DENTSPLY Sirona Inc. (XRAY) $44.24 -3.19%
Express Scripts Holding Co (ESRX) $77.89 -2.49%
Kraft Heinz Co. (KHC) $61.59 -2.32%
Monster Beverage Corp (MNST) $61.03 -1.83%
Dish Network Corp. (DISH) $31.20 -1.83%
NetEase Inc. Ads (NTES) $261.62 -1.80%
Mondelez International Inc. (MDLZ) $42.13 -1.63%
Ctrip.Com International Ltd. Ads (CTRP) $43.91 -1.33%
Liberty Global plc Series C (LBTYK) $27.64 -1.25%
Henry Schein Inc. (HSIC) $73.74 -1.25%