Stock market today: Dow rises, Nasdaq slips as fresh earnings roll in

The small-cap Russell 2000 (^RUT) index is up more than 1.5% on Wednesday, far outpacing the gains of the three major indexes and closing in on it's 52-week high of 2,300.

If the Russell closes at its current levels it mark the highest close for the index since November 2021.

Small caps have been one of the most highly debated trades on Wall Street in 2024. Given the sector's higher exposure to refinancing risk, strategists have argued that lower rates will benefit the group. That thesis, combined with evidence that the US economy continues to track for solid growth, has once again built the case for an allocation to small caps, according to Wall Street strategists.

Morgan Stanley chief investment officer Mike Wilson recently moved to a "neutral" on allocation to small versus large caps following the Federal Reserve's half a percentage point interest rate cut in September.

"For us to get outright bullish on Small caps overall, leading macro indicators would likely need to show that a clear acceleration in growth is coming," Wilson wrote in a note to clients on Tuesday. "For now, we're focused on idiosyncratic opportunities within the small cap space."

He added, "Valuation is relatively cheap for small caps, while earnings are set to improve. To some extent, this has been the Small cap index mantra for nearly two years, but after consecutive years of earnings contraction, the consensus is more optimistic on earnings expansion ahead."

The US global Jets ETF (JETS) rose around 3% to hit a fresh 52-week high on Wednesday. The ETF's top holdings include major carriers such as United Airlines (UAL), Delta (DAL), American Airlines (AAL), and Southwest (LUV).

The rally in airlines follows a better-than-expected earnings report from United after the bell on Tuesday. The carrier posted adjusted earnings of $3.33 per share for the third quarter, topping Wall Street's estimates for $3.07.

United also announced a program to repurchase up to $1.5 billion in shares. Its stock rose more than 9% in morning trade on Wednesday.

Amazon (AMZN) and Dominion Energy (D) said on Wednesday that they have signed an agreement to advance the development of nuclear Small Modular Reactors in Virginia.

The partnership is part of Amazon Web Services' investment of over $500 million in nuclear power, CNBC reported. Amazon is the latest big tech company to explore nuclear energy to power its artificial intelligence plans. Both Alphabet (GOOGL, GOOG) and Microsoft (MSFT) have laid out nuclear strategies.

Shares of Dominion Energy spiked more than 4% on the news.

Morgan Stanley (MS) stock jumped 4% at the open after the company reported large year-over-year increases across a variety of metrics in its third quarter earnings release.

Yahoo Finance's David Hollerith reports:

Fees from investment banking jumped 56% from a year ago, the largest leap among big banks, to nearly $1.4 billion.

The pick-up in investment banking and an increase in trading helped Morgan Stanley push its net profit up by 32% from a year earlier, to $3.2 billion.

The results cement a broad rebound across the Wall Street operations of the country's biggest banks. Investment banking fees and equity trading revenue also jumped at JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C).

Read more here.

US stocks were muted on Wednesday as investors digested results from Morgan Stanley (MS) and others to potentially power a rebound to record highs after an ASML-fueled (ASML) slide.

The Dow Jones Industrial Average (^DJI), the benchmark S&P 500 (^GSPC), and the tech-heavy Nasdaq Composite (^IXIC) were all near flat at the open.