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Stocks Struggle Amid European Worries, Weak Housing Report; Commodities Mixed

By: MT Newswires
Posted: 8/16/2011 12:44:00 PM
Referenced Stocks: ALL;ERTS;GS;ICGN;MSHL

Stocks are paring some of their early declines but the major indexes are still lower at mid-day, as investors shift their attention to concerns across the pond, where new data suggests the global recovery is stalled. Domestically, new residential construction also slowed last month.

Weaker-than-expected German GDP data is pressuring European stock averages. Germany's economy expanded only 0.1% in Q2 from the preceding three months, marking a sharp slowdown from the 1.3% growth posted in Q1. Also today, the euro zone's economy expanded 0.2% in Q2, below expectations for a 0.3% rise.

Housing remains a drag on the U.S. economy. Residential construction starts fell 1.5% in July. The Commerce Department said starts fell to a seasonally adjusted annual rate of 604,000 from a downwardly revised 613,000 rate in June. Economists polled by MarketWatch had anticipated a 600,000 annualized rate for July, while many had thought June's initial reading of 629,000 was too strong. Single-family starts fell 4.9% to 425,000. Building permits, a less volatile statistic, fell 3.2% to an annual rate of 597,000 in July, and June's data also was downwardly revised, to 617,000 from 624,000.

July import prices were up 0.3% as oil prices gained early in that period before falling.

In company news:

Shares of Marshall Edwards ( MSHL ) are scoring big in the regular session after the company announced this morning that its investigational new drug application for its anti-tumor drug has been approved by the U.S. Food and Drug Administration. The company says it plans to start a Phase I clinical trial by September.

Allstate Corp ( ALL ) has sued Goldman Sachs ( GS ), accusing the bank of hiding the risks associated with more than $123 million of mortgage backed securities it sold to the insurance company.

Shares of Electronic Arts ( ERTS ) are down as media reports indicate the video game developer acquired social mobil-game maker Bight Interactive. Bight focuses on so-called "freemium" games where people can play for free but must pay for virtual goods within the game environment, according to a report in the Silicon Valley Business Journal on the matter. The makes games for iOS, Android and other mobile platforms.

Shares of Icagen ( ICGN ) are down following news that the company has mailed a letter to its stockholders reiterating its recommendation that they accept the $6 per share tender offer from Pfizer (PFE). The company said that its board of directors has unanimously determined that the tender offer is fair to and in the best interests of the company.

Shares of Wells Fargo & Co. (WFC) are down after Bloomberg reported that Warren Buffet's Berkshire Hathaway (BRK.A, BRK.B) added 9.7 million shares in the second quarter to its stake in the biggest U.S. home lender, boosting its holdings by 2.8%. Buffet told Charlie Rose in an interview to be broadcast on PBS, that his company on Monday, "spent more money in the stock market buying than any day this year."

Statoil (STO) is up after the Associated Press reported that the Aldous and Avaldsnes oil discoveries together contain between 500 million and 1.2 billion barrels of oil equivalent - a great deal more than previously thought. Statoil owns a 40% stake in both discoveries.

In earnings news:

--Shares of Wal-Mart Stores (WMT) are firm in the regular session - paring initial pre-market weakness - to trade up 3.8%., or $1.89, to $51.87 after the company said Q2 EPS from continuing operations was $1.09, a penny more than the Thomson Reuters mean. Sales were $108.6 billion, more than estimates for $108.35991 billion. The retail giant said it sees Q3 EPS between $0.95 to $1.00 and raised FY EPS guidance to $4.41 to $4.51. Estimates are for FY EPS of $4.46.

--Shares of Home Depot (HD) are adding to pre-market gains in the regular session. Shares are getting boost after the home improvement retail chain said second quarter earnings came in at $0.86 per share, better than the analyst consensus of $0.83 per share on Thomson Reuters. Sales were $20.2 billion, better than the Street view of $19.9 billion.

Commodities are mixed. December gold contracts are up 1.18% to $1,778 an ounce while September crude oil contacts are down 0.17% to $87.48 a barrel.

In energy ETFs, the United States Oil Fund (USO) is down 0.44% to $34.07 and the United States Natural Gas fund (UNG) is down 1.92%, to $9.97.

In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.75% to $173.11. Market Vectors Gold Miners (GDX) is down 0.33% to $60.71. iShares Silver Trust (SLV) is up 0.75% to $38.96.