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Midday Market Update

Stocks Mostly Higher; Data, Apple in Focus

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U.S. Market
Stocks were mostly higher today as the market mostly shrugged off Apple’s disappointing earnings forecast.

Initial jobless claims fell by 5,000 to a five-year low of to 333,000 last week. Economists had expected claims to come in at 360,000. The less volatile four-week moving average fell 8,250 to 351,750. The fall in claims points to a strengthening job market.

At midday the Dow was up 0.6%, the S&P 500 was 0.4% higher while the Nasdaq was down 0.1%.

Stocks on the Move
Shares of  Apple (AAPL) tumbled more than 10% this morning after the firm provided disappointing guidance.  Revenue rose 18% in the quarter to $54.5 billion but earnings were little changed as gross margins fell to 38.6% from 44.7%. iPhone unit shipments of 47.8 million during the December quarter reflect a 29% increase from the 37 million iPhone 4S shipments during the year-ago period, but was modestly below consensus estimates of roughly 50 million.  The firm’s projected revenue range of $41-43 billion for the fiscal second-quarter was below projected estimates of $46 billion.

 Netflix (NFLX) shares surged 38% this morning after reporting  stronger than expected fourth-quarter results. The company's overall EPS of $0.13 was well ahead of the consensus estimate calling for a $0.07 loss and the beat was driven across all three units: domestic streaming, DVD rental (subscriber declines decelerated), and the international business posting a loss of $105 million (slight beat).

On Thursday,  3M (MMM) reported fourth-quarter and full-year results that were  in line with our expectations. During the fourth quarter, the company enjoyed a 4.2% year-over-year revenue increase, led by strong rebounds in the United States and Asia Pacific. In the U.S., volume climbed 3.8% following two quarters below 1% growth, as all segments except safety, security, and protection saw sales increases. This increased sales base also led to improved profitability from last year's fourth quarter, with operating margins climbing to 19.5% from 19.2%. Shares were up slightly at midday.

Foreign Markets
European markets were higher today after new economic data showed an easing of the eurozone recession.  In late trading, the FTSE 100, Paris CAC and Germany’s DAX were up 1.1%, 0.7% and 0.5% respectively.

Asian shares were mixed on the day. The Shanghai Composite was down 0.8%, the Hang Seng was off 0.2% while the Nikkei 225 was up 1.3%.  

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