Stocks are losing steam at mid-day, after the Dow Jones Industrials had gain 104 points with 27 of its 30 components moving to the upside. The initial gain came after producer price data came in stronger than analysts had anticipated. Still, corporate earnings for some firms - such as Dell Inc. ( DELL ) - gave investors pause and a reason to reconsider the strength of the economic recovery.
Producer prices rose a seasonally adjusted 0.2% in July, as a surge in tobacco prices offset a decline in energy costs, the Labor Department said this morning. Excluding food and energy, the so-called core PPI rose 0.4%, the largest monthly gain since January, MarketWatch reported. Both readings were stronger than Wall Street economists predicted. Over 12 months, producer prices have climbed an unadjusted 7.2%.
Shares of Dell Inc. ( DELL ) are down sharply after the computer maker reported late yesterday that Q2 non-GAAP EPS came in at $0.54 on sales of $15.7 billion. The Street view is for EPS of 0.49 on sales of $15.76 billion. Dell raised its non-GAAP operating income growth expectation for FY 2012 to 17% to 23% year-over-year from 12% to 18%. The company also revised its full-year revenue-growth outlook to 1% to 5% from the previous range of 5% to 9%.
In company news:
E*Trade Financial ( ETFC ) shares are higher, after the online brokerage said July daily Average Revenue Trades were 144,023, an 11% increase from June and a 12% increase from the year-ago period. It ended the month with 2.8 million brokerage accounts - including 24,110 gross new brokerage accounts and 916 net new brokerage accounts during the month.
Shares of Southern Union ( SUG ) are higher after Williams ( WMB ) said late Tuesday that it still wants to buy Southern Union for $44 per share in cash. But Southern Union still backs a competing offering from Energy Transfer Equity, Reuters reported.
Five tobacco companies including Lorillard ( LO ), Reynolds American (RAI) and Vector Group (VGR) have filed a lawsuit to stop an FDA regulation that requires graphic anti-smoking warning labels to be placed on cigarette packs, The New York Times reported. Altria (MO), the parent company of Philip Morris, said it supported the new law and has not joined the lawsuits.
Shares of Kinetic Concepts (KCI) are down after Bloomberg reported that Bain Capital had pulled out of talks with Avista Capital Partners involving a bid for the company. Bain Capital and Avista Capital were seeking to raise financing for a takeover offer that would top a $5 billion bid from Apax Partners that is already on the table.
In earnings news:
--Shares of Target (TGT) are higher after the upscale discount retailer reported second quarter earnings per share came in at $1.03, which was better than the analyst consensus of $0.97 a share on Thomson Reuters. Sales were $15.9 billion, which was shy of Street estimates of $16.1 billion. For Q3, the company expects EPS in the range of $0.70 to $0.75 per share, vs. the Street view of $0.71 per share. For the full year 2011, EPS is seen in the range of $4.15 to $4.30 per share, vs. expectations of $4.12 per share.
--Shares of Staples Inc. (SPLS) have turned lower, down 0.63%, after the office supply chain reported fiscal Q2 adjusted EPS came in at $0.22 compared with $0.20 a year earlier, two cents better than the Street view. Sales were up 5.2% to $5.82 million. The Street looked for $5.64 million. For the fiscal year, Staples said it expects to achieve adjusted earnings per share between $1.39 and $1.45. Analysts are, on average, forecasting $1.36 a share on the year.
Commodities are higher. December gold contracts are up 0.04% to $1,786 an ounce while September crude oil contacts are up 0.82% to $87.41 a barrel.
In energy ETFs, the United States Oil Fund (USO) is up 0.41% to $33.97 and the United States Natural Gas fund (UNG) is up 0.4%, to $9.98.
In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.07% to $174.04. Market Vectors Gold Miners (GDX) is up 0.32% to $60.47. iShares Silver Trust (SLV) is down 0.26% to $38.91.
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