Stocks Off Highs But Remain Solidly Positive at Mid-Day: Earnings, Economic Data Dominate Attention
Stock indexes have backtracked from solid gains earlier after the Conference Board said mid-morning that economic growth lacks momentum and remains slow, but are still solidly in positive territory at mid-day. Generally upbeat economic reports and positive earnings from several bellwether names combined to fuel a rally during the first half of the session.
On the economic front, the number of people who signed up for state unemployment insurance benefits fell 23,000 to 452,000 in the week ended Oct. 16, the U.S. Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims to fall to a seasonally adjusted 450,000. The four-week moving average of new claims, a more accurate gauge of employment trends than the volatile weekly number, fell 4,250 to 458,000.
Stocks tempered their gains, however, after the Conference Board said that its leading economic indicators index rose 0.3% in September, which economists had largely expected, according to MarketWatch. The figure suggests that economy continues to grow slowly but lacks momentum, the board said.
Also, the Federal Reserve Bank of Philadelphia reported that the index of manufacturing activity in the mid-Atlantic region rose to positive 1.0 this month from 0.7 in September, MarketWatch reported. This is the first time in three months the index has been in positive territory.
In company news, UnitedHealth ( UNH ) plans to pay cancer doctors to stop marking up the prices of drugs as a part of a test in reducing the cost of medical plans and their customers, Bloomberg reports. Physicians who are seeing 1,500 cancer patients in Georgia, Missouri, Ohio, Tennessee and Texas will get reimbursed for the wholesale cost of medicine they administer, the report said.
Toyota Motor Corp ( TM ) is down slightly in morning trade on the NYSE after the car maker recalled 740,000 vehicles sold in the United States on concerns about unsafe brakes. The recall applies to its Avalon models built between 2005 and 2006, as well as some hybrid Highlanders and Lexus models. Globally, Toyota is recalling 1.5 million cars due to brake issues.
Google Inc. ( GOOG ) managed to cut its taxes by $3.1 billion over the last three years using a strategy that moves a majority of its foreign profits through Ireland and the Netherlands to Bermuda, Bloomberg reported. The move helped reduce its overseas tax rate to 2.4%, which the report said was the lowest of the top five U.S. technology companies.
On the financial services front, Raymond James Financial's ( RJF ) chairman said he sees broker recruiting rebounding from the slow pace this year and said the firm is looking for small takeover candidates to help accelerate expansion for the firm. Raymond James reported reported fourth quarter earnings that beat analysts' expectations.
Barnes & Noble ( BKS ) plans to take its Nook electronic reader to 2,500 Wal-Mart stores this month as the bookstore chain attempts to reach out to more shoppers in front of the all-important holiday shopping season, Reuters reported. Bookstore chains like Barnes & Noble have suffered as more readers buy their books online or as electronic books.
Chevron Corp ( CVX ) is gaining on plans to resume development of a deepwater project in the Gulf of Mexico. The Jack and St. Malo projects will cost about $7.5 billion, involving the construction of three sub-sea centers. Combined, they will produce about 170,000 barrels of oil a day. Chevron's plan is the first to be announced after the Obama administration put a moratorium on deepwater drilling after the BP plc ( BP ) oil spill disaster in April.
Earnings news has been an early driver of trading.
--McDonald's Corp ( MCD ) is higher after third quarter earnings topped analysts' expectations on strong growth worldwide, as well as higher demand for iced coffee drinks in the United States.
--United Continental Holdings Inc ( UAL ) is on the rise after the parent of United Airlines, which merged with Continental Airlines earlier this month, returned to the black in the third quarter.
--Children's Place Retail Stores Inc. ( PLCE ) fell by double digits in morning trade after the children's clothing retailer cut its third quarter earnings projections.
--Eli Lilly & Co ( LLY ) is down after third quarter sales failed to meet analysts' expectations, even though earnings beat forecasts.
--Union Pacific Corp ( UNP ) is down even though the railroad group posted third quarter earnings that beat analysts' expectations.
--United Parcel Service Inc. ( UPS ) another economic bellwether because its shipping business is directly tied to the economy, raised its full-year outlook after operating profit at its U.S. units improved.
--eBay ( EBAY ) is sharply higher after projecting fourth quarter sales and earnings to beat analysts' expectations amid increased sales through its PayPal payment service.
--Netflix ( NFLX ) is soaring after it said it expects fourth quarter results to be above analysts' projections and also raised its year-end subscriber forecast to 19.7 million customers from 18.5 million.
Commodities are lower as December gold contracts fell $6, or 0.45%, to $1,338 an ounce while November crude contacts are down 1.39%, or $1.16, at $81.38 a barrel.