Stocks Tread Water on Mixed Earnings and Bernanke Testimony

Published on Thursday, 02 February 2012 12:33 Written by J Hawk

New York, February 2^nd (TradersHuddle.com) – U.S. stocks opened lower this morning as a lack of a swap deal between Greece and its creditors failed to materialize, and despite a better than expected Initial Jobless Claims number. Nevertheless, the market recovered somewhat by midday.

The Dow Jones Industrial Average dropped more than -49 points on the opening or -0.4 percent to 12,413, while the broader indexes also declined, with the S&P 500 index shedding 5, or -0.4 percent and the Nasdaq Composite losing 4 points or -0.15 percent.

At midday, the Dow continued in negative territory, down -5.40 or -0.04 percent to 12,711, while the broader based indexes had turned positive with the  S&P 500, up +1.59 or +0.12 percent to 1,325.68, and the Nasdaq Composite index gaining +12.60 or +0.44 percent to 2,860.

U.S. economic data had today’s weekly Initial Jobless Claims drop to 367K from the previous week’s 379K with a market consensus of 373K, while quarterly Preliminary Nonfarm Productivity increased by +0.7, versus +1.0 expected, with the previous number downwardly revised from +3.1% to +1.9%. Also out were quarterly Preliminary Unit Labor Costs, which increase by +1.2%, versus +0.9% that was expected.

Also affecting the market was Fed Chief Ben Bernanke’s testimony before a House committee, where he stated that, “Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences.”

U.S. Stocks in the News

Qualcomm (NASDAQ: QCOM) stock was up +1.82 or +3 percent midday to $61.38 per share, after the company reported record breaking revenue of $4.7 billion or GAAP EPS of 81 cents (non-GAAP EPS was 97 cents) in the first quarter, a 20 percent increase over the same period last year. The mobile hardware maker of the Snapdragon mobile processor also got a boost from Goldman Sachs (GS), who reiterated a “conviction buy” recommendation. In addition, Wells Fargo & Co. (WFC) reiterated an “outperform” rating on the company, while Deutsche Bank (DB) reiterated their “buy” recommendation.

Dow Chemical (NYSE: DOW) stock was trading down -0.15 or -0.44 percent at midday to $33.78 per share, after the company missed analyst expectations of earnings for the fourth quarter. The large chemical company reported a net loss of $20 million or 2 cents per share in the fourth quarter compared to earnings of $426 million or 37 cents per share in the same period one year ago. Excluding some charges, earnings came in at 25 cents per share, versus analyst expectations of 30 cents per share.  

Merck & Co. Inc. (NYSE: MRK) stock was off -0.51 or -1.32 percent midday to $38.12 per share after the company reported a profit of $1.51 billion or 49 cents per diluted share in the fourth quarter. This compares to a net loss of $531.7 million or 17 cents per share in the same quarter one year ago. Revenue rose to $12.29 billion, a +1.7 percent increase versus last year. Adjusted net income was 97 cents per share, beating analyst estimates which called for 95 cents per share. After the earnings release, Chairman and CEO Kenneth Frazier stated that “We closed out 2011 with a high-quality fourth quarter by growing the top and bottom lines. Our overall performance for the year confirms our ability to achieve strong operating results while investing for the longer term. As we begin 2012 and look ahead, we are optimistic about our underlying business, our current momentum and the early success of our strategy.”