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Stocks Higher; Q3 GDP Revised Upward, But Below Street Estimates; Oil Tops $90 a Barrel

By: MT Newswires
Posted: 12/22/2010 12:45:00 PM
Referenced Stocks: ARMH;DB;INTC;JNJ;MSFT

Stocks are hitting session highs at mid-day as investors decipher a mixed set of new data that showed the economy expanded faster than originally thought in Q3, but still short of economists' expectations, while home prices in the U.S. have lost traction. A mixed round of retail earnings also are tempering gains, while crude oil futures top $90 a barrel.

New data showed the U.S. economy grew at a 2.6% annual rate in the third quarter, an upward revision that still came in below market expectations. In November, the U.S. Commerce Department said the economy grew in Q3 at an annual rate of 2.5%. Economists polled by MarketWatch had expected the revised figure to be up 3%.

Meanwhile, sales of existing homes rose 5.6% to 4.68 million, which is a seasonally adjusted number, according to the the National Association of Realtors. Still, sales remained 27.9% below last year's levels and under the 5.26 million in June during a key homebuyer tax credit. Also, U.S. home prices fell 3.4 percent in October from a year earlier, the Federal Housing Finance Agency reported, and mortgage applications were also down last week.

In Wednesday company news:

Shares of Johnson & Johnson ( JNJ ) are down after a group of shareholders accused the company's directors of ignoring red flags signaled production problems that led to government investigations of manufacturing glitches, Bloomberg reported. The shareholders are asking J&J to pay damages and improve its corporate governance and internal procedures. J&J has been buffeted by a series of product recalls over the last year.

Microsoft ( MSFT ) is working on a version of its Windows operating system for devices such as tablet computers, Reuters reports. The company reportedly also said that its Windows Phone 7 software is making inroads into the smartphone market. The software giant will unveil a version of its software that runs on processor designed by UK-based ARM Holdings ( ARMH ) instead of Intel ( INTC ).

Deutsche Bank ( DB ) is down after agreeing Tuesday to pay $553.6 million to settle federal charges connected to its role in tax shelters that enabled high-wealth individuals in the United States to avoid hundreds of millions of dollars in U.S. taxes.

Vertex Pharmaceuticals Inc. (VRTX) is down this morning after reworking the Phase II trial of Telaprevir and VX-222, two investigational drugs to treat hepatitis C virus (HCV). Also, Threshold Pharmaceuticals (THLD) is up near 9%, after it says early Phase 1 clinical trial results of TH-302 in patients with advanced leukemia were positive.

Shares of Teradata (TDC) are down as the company says it will acquire privately-held Aprimo--a cloud-based software marketing company--for $525 million, according to a company statement. The move will help Teradata to better compete with rival IBM (IBM), which bought Teradata's rival Netezza Corp in September for $1.7 billion.

Bank of America (BAC) shares are higher as investors shrug off several negative news, one of which involves WikiLeaks. The organization's founder said he has major revelations that could lead to the head of a large U.S. bank to resign, reports. There has been speculation that Bank of America is a WikiLeaks target. Also, a report in The New York Times accuses Bank of America and JPMorgan Chase (JPM), or their contractors, of breaking into people's homes.

Retail earnings were plentiful last night and this morning, including:

The Finish Line Inc. (FINL) is down sharply after it reported Q3 results that beat Street estimates by $0.03, with Q3 earnings of $0.08 a share on $260.9 million in revenues. Sales for the athletic shoe store chain rose 8.7% over year-ago levels, topping consensus analyst opinion by $21.8 million. Same-stores rose 4.5%.

Drugstore chain Walgreen Co. (WAG) is higher reported Q1 profit of $0.62, beating Street consensus by $0.08. Sales for the quarter rose 6% to $17.3 billion, same-store sales rising 0.8%. "We continue to make solid progress on our key initiatives," CEO Greg Wasson said.

Nike Inc (NKE) shares are down after reporting future sales rose 11%, or as much as 2% below Wall Street expectations for the key sales metric. Overall, the shoe manufacturer said Q2 earnings reached $0.94 a share -- beating analyst estimates by $0.06, according to Reuters -- while the $4.84 billion in revenues for the quarter beat forecasts by about $30 million.

Shares of Orbitz Worldwide (OWW) are down sharply after American Airlines pulled its flights from the company's travel booking Web site, Reuters reported. The move comes after a judge in Illinois denied a request for an injunction seeking to prevent that move.

Shares of Exco Resources (XCO) are up fractionally in the regular session on news the company is acquiring Marcellus Shale properties from Chief Oil & Gas for $459.4 million. The companies are closing the transaction into an escrow account pending receipt of a third-party wavier, expected by mid-January.

Commodities are mixed. February gold contracts are down $1, or 0.04%, to $1,388 an ounce while February crude oil contacts are up 0.61%, or $0.54, at $90.36 a barrel.

In energy ETFs, the United States Oil Fund (USO) is up 0.52% to $38.49 and the United States Natural Gas fund (UNG) is down 0.36% to $5.58.

In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.04% to $135.38. Market Vectors Gold Miners (GDX) is down 0.23% to $60.41. iShares Silver Trust (SLV) is up 0.10% to $28.67.