Boeing set to lead Wall Street higher after two-day slump

[January 31, 2018]   By Tanya Agrawal

(Reuters) - U.S. stocks were set to gain on Wednesday, after two days of steep losses, boosted by a controversy-free State of the Union speech by President Donald Trump and a rise in Boeing's shares.

Boeing <BA.N> posted quarterly results that beat market estimates and said plane delivers would rise this year, sparking a 6 percent surge in its shares, the biggest weight in the price-weighted Dow Jones Industrial Average <.DJI>.

The blue-chip Dow suffered its biggest two-day drop since September 2016 over Monday and Tuesday as U.S. Treasury yields surged to near four-year highs on expectations of global central banks lowering stimulus.

The stock market has been hit by the pace of the increase, rather than the rise in yields itself, which raises borrowing costs for firms and gives traders another investment option.

The Federal Reserve's two-day meeting ends on Wednesday and its statement at 2 p.m. ET (1900 GMT) could shed light on the central bank's economic and interest rate hike outlook.

Currently, the markets have priced in three rate hikes this year, and while analysts do not expect the first of them to come this month, they expect the Fed to strike a more hawkish tone.

"We're not expecting any changes today, but we may get some insight into whether the new tax reforms have altered the views of policy makers," said Craig Erlam, senior market analyst at Oanda.

"A slight change in the statement can get quite a reaction in the markets, so traders as ever will be looking for any signs that future rate hikes are under-priced, given the recent changes."

At 8:24 a.m. ET, Dow e-minis <1YMc1> were up 211 points, or 0.81 percent, with 59,978 contracts changing hands.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 26, 2018. REUTERS/Brendan McDermid

S&P 500 e-minis <ESc1> were up 11.75 points, or 0.42 percent, with 216,367 contracts traded.

Nasdaq 100 e-minis <NQc1> were up 32 points, or 0.46 percent, on volume of 51,483 contracts.

U.S. stock index futures drifted higher late on Tuesday as Trump gave his State of the Union address.

Among other comments, Trump said he wanted legislation to generate at least $1.5 trillion for infrastructure spending and revisited a campaign promise to lower drug prices.

An ADP report showing the U.S. private sector added much more jobs in January than expected, 234,000 vs. 185,000, also boost sentiment ahead of the more comprehensive non-farm payrolls data on Friday.

Among stocks, Advanced Micro Devices <AMD.O> was up 3.2 percent a day after the chipmaker's fourth-quarter results handily topped forecasts.

Electronic Arts <EA.O> jumped 7.3 percent after the videogame maker forecast fourth-quarter revenue above analysts' estimates.

Microsoft <MSFT.O> and Facebook <FB.O> are due to report results after the closing bell.

(Reporting by Tanya Agrawal in Benagaluru; Editing by Savio D'Souza)

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