Midday U.S. Stock Report – Tech Stocks Up on Favorable Earnings

Published on Friday, 20 January 2012 13:45 Written by J Hawk

New York, January 20^th (TradersHuddle.com) - U.S. stocks remain mixed at mid-day, with the Dow Jones Industrial Average up moderately while the broader market indexes showed weakness. Strong earnings reports by tech stocks IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT) for the fourth quarter appear to be leading averages to a third consecutive weekly gain.

In terms of domestic economic data, U.S. Existing Home Sales increased to 4.61M from a previous 4.39M, but was lower than the expected 4.65 M. This had little effect on the stock market early in the session, as the focus remained on earnings.

News from Europe continues to affect world markets as Greece tries to come to an agreement with creditors on a debt swap plan before €14.5 billion in debt becomes due on March 20^th. 

U.S. Stocks in the News

IBM (NYSE: IBM) stock was up +7.23 or +4.01% to $187.75 per share at mid-day, after the company reported fourth quarter earnings after the closing bell on Thursday. IBM reported diluted earnings of $4.62 per share for the quarter, showing an increase of 4 percent compared with Q4 2010. Income for the quarter rose to $5.5 billion compared to $5.3 billion in Q4 2010 while revenues increased by 2 percent to $29.5 billion.

The company also provided a bright earnings forecast for 2012 of at least $14.16 in net earnings with operating earnings of $14.85 per share. Big Blue is a major component of the Dow, and along with Microsoft stock — which also reported favorable earnings — is helping drive the industrial average higher.

Microsoft (NASDAQ: MSFT) was up +1.246 or +4.43% to $29.366 per share midday after the company reported $6.62 billion in earnings on $20.89 billion in sales for the fourth quarter of 2011. In a statement after the earnings release, Chief Financial Officer Peter Klein stated that, “We saw strong demand for our business products and services, despite the soft PC market and continuing economic uncertainty in key parts of the world. We delivered record earnings per share by continuing to manage our costs while investing for future growth.”

General Electric (NYSE: GE) was a Dow component trading lower at midday. The stock traded as low as $18.68 earlier, but is now down only -0.12 or -0.63% on the day to $19.03 per share. GE posted lower than expected fourth quarter operating earnings of $4.1 billion or $0.39 per share, on $38.0 billion in revenue. Despite not meeting analyst expectations, the company remains optimistic about its prospects.

In a statement after the earnings release, GE Chairman and CEO Jeff Immelt said, “We are confident in our 2012 framework to realize double-digit earnings growth in our Industrial and Capital segments, increase margins and provide dividend growth to our shareholders in line with earnings.”

Morgan Stanley’s (NYSE: MS) results beat market expectations yesterday by reporting a smaller than expected loss of -$227 million, or -14 cents per share, for the fourth quarter of 2011, compared to earnings of $867 million, or 43 cents per share for the same period a year ago. A survey of analysts showed they expected a loss of -57 cents per share. Morgan Stanley stock is currently trading at $18.21, down only -$0.07 after trading as low as $17.81 earlier.

Meanwhile, Google (NASDAQ: GOOG) plunged to the bottom of the S&P 500, as shares tumbled more than 8% after results fell short of estimates. Barclays cut its target price to $700 from $730, while Robert W. Baird trimmed its target price to $750 from $760. Earlier in the month, the stock had reached a 52-week high of $670.25.