Stocks Lower as US Trade Deficit, Earnings Weigh; Crude Falls on Inventory Build

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Stocks are lower at the session's half as the major indexes pare prior-session gains following a spate of negative earnings and economic news, including disappointing results from a Blue Chip name and new data showing the US trade deficit widened, despite record exports.

Walt Disney Co. ( DIS ) is down after reporting Q2 EPS of $0.49, up from $0.48 per share in the prior year quarter. Revenue was $9.07 billion, up from $8.58 billion. The Street view was $0.57 per share in earnings on revenue of $9.11 billion.

The U.S. trade deficit widened by 6% in March to $48.2 billion, the Commerce Department said Wednesday. The trade deficit was above the consensus forecast of Wall Street economists for $47.0 billion. Exports rose to the highest level on record while imports were the strongest since August 2008.

Also, crude oil futures moved lower following talk about interest rate hikes in China and a larger-than-expected rise in U.S. oil supplies last week. The Energy Information Administration said crude oil inventories for the week ended May 6 increased by 3.8 million barrels, above the 1.1 million barrels expected by analysts.

The major refiners--including Chevron ( CVX ), BP( BP ), Royal Dutch Shell (RDSA) and Exxon ( XOM ) were all trending lower.

In company news:

Intel ( INTC ) is higher after it raises its quarterly cash dividend 16% to $0.21 per share, beginning with the dividend that will be declared in Q3. The move is the second time in six months the world's largest chipmaker as boosted its dividend as corporate technology spending increases.

Shares of Johnson & Johnson (JNJ) are higher following an AP report that the drug and health care products company is recalling a prescription drug due to a musty odor--most likely from a chemical on shipping pallets. J&J said it is recalling five lots of HIV medicine Prezista. The recall comes at the wholesale and pharmacy level in five countries.

U.S.-traded shares of HSBC (HBC) are down after the bank released cost cutting measures as part of a strategy day. HSBC plans to slash as much as $3.5 billion from mounting costs and announced a review of its U.S. credit-card business and branch network, MarketWatch and other news outlets reported. The bank said it aims to achieve sustainable annual cost savings of between $2.5 billion and $3.5 billion by 2013, bringing its cost efficiency ratio, the ratio of expenses to revenue, down to between 48% and 52%.

Level 3 (LVLT) firms after it says HBO selected the company to provide content delivery network (CDN) services supporting the new HBO GO mobile app delivery initiative.

American International Group (AIG) shares are gaining after the insurer said it and the U.S. Department of the Treasury, as the selling shareholder, have commenced a registered public offering of AIG common stock, par value $2.50 per share. One hundred million shares will be issued and sold by AIG and 200 million shares will be sold by the selling shareholder. The Wall Street Journal was out with a report earlier Wednesday saying the $9 billion offering was smaller than analysts expected.

In earnings news:

--Teva Pharmaceutical Industries Ltd. (TEVA) reports Q1 non-GAAP EPS rose 11.8% to $1.04 a share, beating the Thomson Reuters mean analyst estimate for $1.03 by a penny. Net sales rose 11.7% to $4.08 billion.

--Arcelor Mittal (MT) says Q1 sales were $22.2 billion, up 7.2% from a year ago. Net income was $0.69 per share, up from $0.42 a year earlier.

--Macy's (M) says Q1 sales were $5.889 billion, more than the Thomson Reuters mean for $5.85849 billion. It earned $0.30 per share, better than forecasts for $0.18.

Commodities are lower. June gold contracts are down 0.73%, to $1,506 an ounce while June crude oil contacts are down 2.46% to $101.32 a barrel.

In energy ETFs, the United States Oil Fund (USO) is down 2.56% to $40.03 and the United States Natural Gas fund (UNG) is down 2.18%, to $10.77.

In precious metal ETFs, the SPDR Gold Trust (GLD) is down 0.94% at $146.51. Market Vectors Gold Miners (GDX) is down 1.9% to $55.68. iShares Silver Trust (SLV) is down 6.18% to $35.18.

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

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