US open: Stocks rally amid earnings deluge; Mnuchin comments weigh on dollar

US stocks rallied in early trade on Wednesday as investors digested a slew of earnings reports and some mixed data points, with the dollar under the cosh following comments from Treasury Secretary Steven Mnuchin.

At 1530 GMT, the Dow Jones Industrial Average was up 0.6% to 26,371.06, the S&P 500 was 0.4% firmer at 2,850.86 and the Nasdaq was up 0.3% to 7,480.89.

In currency markets, the dollar tumbled against the pound, extending its slide from earlier to trade down 1.4% to 0.7044 as sterling hit a post-Brexit high against the US currency following the release of solid UK employment data.

The greenback was also being dragged lower by comments from Treasury Secretary Mnuchin, who said at a press conference in Davos that a weaker dollar is good for the country's economy "as it relates to trade and opportunities".

The US currency also suffered losses against the euro, which rose to three-year high as IHS Markit's composite flash purchasing managers' index for the eurozone rose to 58.6 in January, marking highest level since June 2006.

Spreadex analyst Connor Campbell said: "Though the UK jobs report was decent, the highlight being another minor fall in unemployment, the thrust of cable’s growth is coming from the dollar’s bruised and battered start to 2018.

"Despite ostensibly having the end of the US government shutdown to cheer about the dollar found little room for positivity this Wednesday, almost solely due to Treasury Secretary Steve Mnuchin’s appearance at the World Economic Forum in Davos. At a press conference Mnuchin argued that a weaker dollar was better for the US economy for trade reasons, a comment that was tantamount to kicking an already very sickly dog."

In corporate news, Comcast and United Technologies advanced after their quarterly earnings beat expectations.

Starbucks nudged up after the coffee chain said its workers would be getting pay rises, while McDermott International surged after lifting its 2017 earnings expectations and issuing 2018 guidance that was above consensus.

General Dynamics rallied after a fourth-quarter earnings beat, even as revenue missed expectations, while shares in Royal Caribbean cruised higher after the company reported a 10% jump in quarterly profit.

On the downside, United Continental tumbled after its fourth-quarter earnings release late on Tuesday and Qualcomm nudged down as the European Commission slapped a €997m fine on the chip maker, saying it paid billions of dollars to Apple, a key customer, so that it would not buy from rivals.

General Electric was also a little weaker as its fourth-quarter earnings fell short of expectations at the top and bottom line, while Rockwell Automation was on the back foot after it posted a fiscal first-quarter loss of $236.4m.

Puma Biotechnology nosedived after a European regulatory panel signalled on Tuesday that it was unlikely to give a positive opinion on the company's breast cancer drug.

Still to come, Ford Motor was due to report earnings after the close.

Data releases were mixed. According to preliminary figures out earlier, activity in the US manufacturing sector unexpectedly improved in January.

IHS Markit's flash manufacturing index printed at 55.5 this month, up from 55.1 in December and pointing to the sharpest improvement in manufacturing business conditions since March 2015. Economists had been expecting the index to slip to 55.0.

Meanwhile, the flash services business activity index fell to 53.3 from 53.7 in December, hitting a nine-month lower and missing expectations for a nudge up to 54.0.

The composite output index - which measures activity in both sectors - declined to 53.8 in January from 54.1 the month before, hitting an eight-month low but coming in above expectations for a reading of 53.5.

Data from the National Association of Realtors was less upbeat, however. It showed US existing-home sales fell 3.6% to a seasonally adjusted annual rate of 5.57m in December from a downwardly revised 5.78m in November, versus expectations for a smaller drop of 2.2%.