US STOCKS-Wall St subdued after strong session; focus on earnings

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Updates with mid-session trading

By Johann M Cherian and Sukriti Gupta

Jan 16 (Reuters) - Wall Street's main indexes took a pause on Thursday after a surge in the previous session, helped by a batch of bumper earnings from major banks, while investors assessed data to gauge the outlook for interest rate cuts this year.

At 11:59 a.m. ET, the Dow Jones Industrial Average .DJI rose 26.22 points, or 0.06%, to 43,247.77, the S&P 500 .SPX gained 5.34 points, or 0.09%, to 5,955.25 and the Nasdaq Composite .IXIC lost 53.30 points, or 0.27%, to 19,457.93.

Morgan Stanley MS.N added 3.3% after the lender said earnings increased in the fourth quarter, fueled by a wave of dealmaking, while Bank of America BAC.N slipped 1.2%. The country's second-largest bank predicted higher interest income in 2025.

Investors also focused on comments from Fed Governor Christopher Waller , who said three or four interest cuts this year are still possible if economic data weakens further.

The yield on the 10-year Treasury note US10YT=RR slipped to 4.617% and rate futures were pricing in about 43.5 basis points of rate cuts in 2025 after Waller's remarks, from about 37 bps late on Wednesday, according to LSEG data.

"Anyone who's going to try and project where we are with the unknowns of the new administration and more importantly what the tariffs will or will not do is a mistake," said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.

"Right now you've got to accept that inflation's been stickier than we expected, and on top of that, you have a scenario where you still have confusion around what's next from a political standpoint."

President-elect Donald Trump is expected to take office on Monday.

Seven of the 11 S&P 500 sectors rose, with utilities' .SPLRCU and real estate stocks .SPLRCR up over 1.5% each.

The S&P 500 equally weighted index .SPXEW rose 0.7%, while tech stocks Apple AAPL.O and Nvidia NVDA.O weighed on the Nasdaq.

On the data front, a report showed December retail sales increased less than expected, while another report said the number of jobless claims rose more than expected last week.

On Wednesday, Wall Street's main indexes logged their biggest one-day jump since Nov. 6 after data indicated that underlying inflation was subsiding and three of the country's biggest banks reported bumper results.

The S&P 500 banks index .SPXBK and the regional banks index .KBW have outperformed Wall Street's top indexes so far in January, as investors anticipate a favorable business environment for the sector under Trump. The sentiment was reiterated by bank CEOs on Wednesday.

Of the 28 companies in the S&P 500 that have reported fourth-quarter earnings as of Wednesday, 82.1% have surpassed estimates, according to data compiled by LSEG.

UnitedHealth UNH.N that lost 4.5% after the insurer reported fourth-quarter revenue below estimates.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co TSM.N rose 4.8% after the company posted a record quarterly profit.

At a Senate confirmation hearing, Treasury nominee Scott Bessent voiced support for extending Trump's 2017 tax cuts .

Advancing issues outnumbered decliners by a 1.81-to-1 ratio on the NYSE and by a 1.08-to-1 ratio on the Nasdaq.

The S&P 500 posted 19 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 50 new highs and 84 new lows.

(Reporting by Johann M Cherian, Medha Singh, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

((johann.mcherian@thomsonreuters.com;))