Stocks Turn Positive at Mid-Day as Industrial Production Buoys Investors

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Stocks turned positive at mid-session after a new report showed a jump in industrial production in December by the the biggest amount in five months, suggesting that the economic recovery has momentum going into the new year.

The report offset disappointing data on US business inventories and consumer sentiment. Inventories rose less than expected, showing that demand for goods could be stabilizing, and consumer sentiment unexpectedly declined in a preliminary sampling by Thomson Reuters and the University of Michigan. The index came in at 72.7, down from 75.2 the month before and below expectations for an increase to 76.0.

Output of the nation's factories, mines and utilities rose 0.8% last month, the Federal Reserve said. Overall industrial activity is up 11% since hitting its recession low in June 2009. But it is still 6% below its Sept. 2007 peak.

Meanwhile, U.S. business inventories rose 0.2% in November, the Commerce Department said, below economists' expectations. Sales at U.S. businesses rose 1.2%. The inventory-to-sales ratio, an indication of demand, fell to 1.25 in November from 1.27 in October. Economists surveyed by MarketWatch were expecting inventories to rise by 0.5% in November.

Also, Lackluster retail sales reports also contributing to profit-taking ahead of the three-day Martin Luther King Jr. holiday weekend. Sales rose 0.6% last month to $381 billion, less than analysts expected, although a 13.5% gain over the recession low in Dec. 2008. On the year, sales rose 6.7% over last year, the biggest annual increase since 1999.

Overseas, China raised bank reserve requirements in a move widely interpreted to indicate the government is determined to cool the economy.

In company news:

Shares of Abbott Laboratories ( ABT ) are down after a Wall Street Journal report that it withdrew its U.S. and European applications for an experimental drug called briakinumab. The firm developed to treat a skin condition called psoriasis,. Abbott said regulators could want more research..

With shares of most semiconductor makers soaring after Intel's ( INTC ) blow-out results last night, chip equipment suppliers such as Cymer Inc. ( CYMI ) and Varian Semiconductor Equipment ssociates Inc. ( VSEA ) also are up sharply this morning.

ADRs of Smith & Nephew ( SNN ) are down after the maker of knee and hip replacements said its not in talks that could lead to a merger or takeover, Bloomberg reports. The UK's Daily Telegraph reported that the company is going to start informal negotiations with Biomet. "Smith & Nephew has a long-standing policy of not commenting on press speculation, unless there is a regulatory obligation to do so," Smith & Nephew said in a statement.

Apple (AAPL) and News Corp. (NWS) are delaying the launch of the latter's digital newspaper for the iPad, according to a report in The Wall Street Journal, citing people familiar with the matter. The newspaper, called The Daily, was supposed to be released next Wednesday. Both have reportedly decided they need more time to test it.

Shares of Citigroup (C) are higher following news that the bank will sell warrants this quarter in bank, Bloomberg reports. The warrants were given to taxpayers in return for bailing out the bank during the financial crisis. The warrant sale "would represent Treasury's disposition of its remaining holdings," the Treasury Department said in a statement.

Borders (BGP) is up by double digits after the New York Times reports the company may be close to securing refinancing from GE Capital and other lenders.

Shares of Chevron (CVX) are up as the oil major resumed flow through its pipeline in the southern Niger River delta in Nigeria a month after it was overtaken by militants, Bloomberg reports. The line that was impacted os fixed and operations there have returned to normal, a Chevron spokesman noted.

CVS Caremark (CVS) has been sued by North Carolina pharmacies, which have alleged that CVS violated the North Carolina Pharmacy of Choice Act, as well as committing unfair and deceptive business practices.

The Trans Alaska Pipeline is set to be shut down today to install a bypass on the system, which was shut down earlier this week due to a leak. The leak force BP (BP), ConocoPhillips (COP) and Exxon Mobil (XOM) to suspend 95% of production from Alaska's North Slope area.

Gold Resource Corp (GORO) is off sharply, giving back all of yesterday's gains -- and then some -- following CEO William Reid's appearance Thursday on CNBC. Today's decline also is likely due to the 2% fall in gold prices today.

In earnings news:

--Coinstar (CSTR) has shed nearly a quarter of its market value, after saying Q4 EPS and revenues would be well below its prior guidance.

--JPMorgan Chase (JPM) shares are higher after it reported Q4 EPS of $1.12 per share, up from $0.74 per share in the year ago quarter. Revenue was $26.7 billion, up from $25.2 billion a year ago. The analyst consensus was $1.00 per share in earnings on revenue of $24.3 billion, according to Thomson Reuters.

--Hasbro Inc. (HAS) is down about 3% this morning after the toy company said Q4 and full-year revenues will fall about $100 mln short of the Thomson Reuters average by analysts.

Commodities are lower. February gold contracts are down $29, or 2.08%, to $1,358 an ounce while February crude oil contacts are down 0.32%, or $0.29, at $91.14 a barrel.

In energy ETFs, the United States Oil Fund (USO) is up 0.1% to $38.68 and the United States Natural Gas fund (UNG) is up 0.5% to $6.01.

In precious metal ETFs, the SPDR Gold Trust (GLD) is down 1.05% to $132.64. Market Vectors Gold Miners (GDX) is down 2.3% to $54.76. iShares Silver Trust (SLV) is down 1.39% to $27.61.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: ABT , CYMI , INTC , SNN , VSEA

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