Stocks Weaker on Lower GDP Number

Published on Friday, 27 January 2012 13:40 Written by J Hawk

New York, January 27^th (TradersHuddle.com) - U.S. stocks opened lower this morning  reacting once more to negative earnings and a lower than expected Final GDP number. U.S. Advance GDP was up only +2.8 percent for the last quarter of 2011, the analyst consensus for the release was for a +3.0 percent rise. In addition, the previous number was significantly revised lower, from +2.5 percent to +1.8percent. Also, the Advance GDP Price Index for the quarter came out at +0.4 percent, considerably below the analyst consensus of +2.0 percent.

Despite the lower GDP number, consumer sentiment seems to be improving, according to the University of Michigan’s Revised Consumer Sentiment survey, which came out at 75 versus an expected print of 74.2, and one point higher than the previous reading of 74.

 The Dow Jones Industrial Average opened over fifty points lower or -0.4 percent this morning, extending its losses into midday, despite extended expectations of lower rates from the Federal Reserve. The DJIA index was down -74 or -0.6 percent to 12,656 at midday, with the S&P index down -3.80 or -0.3 percent to 1,314. Nevertheless, the broader based NASDAQ composite managed to stay in positive territory at midday, up +3 or +0.1 percent to 2,808.62.

U.S. Stocks in the News

Chevron (NYSE: CVX) stock was down -2.50 or -2.43 percent midday to 104.09, after the company reported a 3 percent drop in earnings due to a downturn in its refining business. The company earned $5.1 billion in Q4 2011 or $2.58 per share, versus $5.3 billion or $2.84 per share in the same quarter one year ago. For the entire year, Chevron — the second largest oil company in the U.S. — earnings rose 41 percent to $26.9 billion, a new record for the company. 

Starbucks (NASDAQ: SBUX) stock was down -1.16 or 2.4 percent to 47.19 midday, after the company reported its profits had risen 10 percent to $382.1 million or 50 cents per share for the quarter ending January 1^st, up from $346 million, or 45 cents per share in the same period one year ago. Analysts were expecting earnings of 49 cents per share on profits of $3.29 million.

Ford Motor Company (NYSE: F) stock was down -$0.40 or -3.14 percent to $12.34 midday after the company reported pre-tax operating profit of $1.1 billion in the last quarter of 2011.  That amounts to Q4 2011 earnings of $0.20 per share, short of the consensus of $0.25 per share on the same basis.

Solutia Inc. (NYSE: SOA) and Eastman Chemical Company (NYSE: EMN) announced plans for Eastman to acquire Solutia. Solutia’s stock was up $7.74 or 39.67 percent on the news. Also, Solutia reported operating earnings of $54million for the fourth quarter of 2011, showing net sales of $2,097 million that represented an 8% gain from 2010’s fourth quarter. The firm’s diluted earnings per share from continuing operations was reported as $2.16, and the company paid down $127 million in debt, cutting its debt to $1,224 million