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Midday Market Update

Stocks Mostly Higher; Earnings, Debt-Ceiling Vote Eyed

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U.S. Market
Stocks were mostly higher at midday as the markets kept a close watch on corporate earnings reports and a House of Representatives vote scheduled later Wednesday for a temporary debt-ceiling extension. 

In regard to economic data, the Federal Housing Finance Agency reported that home prices in November rose by 0.6%, seasonally adjusted, from the previous month, marking the 10th straight month of an increase. The gain was just below the expected 0.7% increase, but overall prices were 5.6% higher year over year. Separately, both Redbook and the International Council of Shopping Centers reported decreases in weekly retail sales. 

Meanwhile, the International Monetary Fund stated earlier Wednesday that it had decreased its global-growth forecast for the year to 3.5%, 0.1 percentage points lower than its previous forecast in the fall. Much focus is on the eurozone, which the IMF now expects 0.2% contraction as opposed to its previous outlook of 0.2% growth. 

At midday, the Dow was 0.4% higher and the Nasdaq had gained 0.3%. The S&P 500 was flat. 

Stocks on the Move
After Tuesday's closing bell,  Google (GOOG) posted a 6.7% increase in year-over-year profit for the fourth quarter, with net income at $2.89 billion compared with $2.71 billion reported the same time last year. Revenue was $11.34 billion, which fell short of expectations, as did the Internet giant's earnings per share (not including costs and other items). Management was positive about the firm's search business but also noted that its recent merger with Motorola Mobility, though still in early stages, is still lacking a profit. Google's advertising operations, however, had solid revenue growth, and shares were 6.4% higher at midday. 

Also after the closing bell Tuesday,  International Business Machines (IBM) reported its fourth-quarter results. Revenue declined approximately 1% from the year-ago quarter to $29.3 billion, but increased sequentially 18% as IBM's seasonally strong fourth quarter was boosted by a successful start to its current mainframe refresh cycle. The firm's net cash position, excluding finance receivables, increased sequentially from $4.3 billion to $8.7 billion.  Morningstar analysts expect to increase their long-run projections for IBM. Shares had jumped by 5.1% at midday. 

 McDonald's (MCD) fourth-quarter profit increased by 1.4% from the same time last year to $1.4 billion. Total revenue improved by 1.9% to $6.95 billion, and both results came in slightly ahead of expectations. Comparable same-store sales worldwide were mixed for the quarter, but rose by 0.1% in aggregate. However, the fast-food firm acknowledged near-term pressures on profitability and sales. Shares at midday were up by 0.4%. 

 Baker Hughes (BHI) saw its fourth-quarter profit fall by 32% to $214 million compared with last year's tally of $314 million. Sales also dropped by 1.4% to $5.22 billion. Revenue and adjusted EPS were nearly in line with expectations. The firm's operations struggled in North America, but its international segment improved. At midday, shares were up by 0.7%. 

Foreign Markets
Stocks in Europe were mixed as the FTSE 100 gained 0.3% and the DAX rose by 0.2%. The Paris CAC, however, lost 0.4%. 

Asian stocks were also mixed as the Shanghai Composite gained 0.2%, but the Nikkei 225 and the Hang Seng lost 2.1% and 0.1%. 

Kevin O'Shaughnessy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.