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Midday Market Update

Stocks Higher After Earnings, Housing Data

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U.S. Market
Stocks were higher this morning as investors considered housing data and earnings.

New home sales unexpectedly dropped 7.3% in December from November levels; economists had expected an increase of 2.1%. Overall, sales for all of 2012 were nearly 20% higher than 2011 levels.

At midday the Dow and Nasdaq were each up 0.3% while the S&P 500 was 0.2% higher.

Stocks on the Move
Shares of  Procter & Gamble (PG) rose 3.6% after the firm reported fiscal second-quarter results and  raised its outlook for the remainder of the year. Underlying second-quarter sales ticked up 3% year over year--on top of a 4% increase in last year's second quarter--including a 5% jump in baby and feminine care, 4% in health care, and 3% in fabric and home care. Adjusted gross and adjusted operating margins popped 110 basis points to 51.2% and 20.0%, respectively--which is encouraging and indicates that the firm's $10 billion cost-cutting efforts (to reduce overhead, improve material costs from product design and formulation efficiencies, and increase manufacturing and marketing productivity) are taking hold.

 Halliburton (HAL) announced  respectable fourth-quarter results. Revenue was up 3% sequentially to $7.3 billion, while operating income was flat on adjusted basis with the prior quarter at $981 million. In the important North American market, revenue dipped 5% sequentially to $3.8 billion while adjusted operating income declined 22% over the same time frame to $465 million. The star of the quarter, in our view, was Halliburton's international results. All three of Halliburton's international regions and 8 of its 12 product lines set new revenue records. Shares were 4.7% higher at midday.

 Microsoft (MSFT) reported fiscal 2013 second-quarter earnings  in line with expectations late Thursday. Consolidated revenue growth of 2.7% was driven by modestly strong growth in the Windows and Windows Live division and strong growth in the server and tools division as well as the online services division, partially offset by declines in the entertainment and devices division and Microsoft Business division. Operating margin of 36.2% was down from 38.3% last year due to a variety of factors, including an increase in marketing spending to support the launches of Windows 8 and the Surface RT tablet and a shifting product mix. Shares were up less than 1% on the news.

Foreign Markets
European markets were higher on the day after new data showed a continued contraction in the UK but signs that Germany’s growth was accelerating. European banks also announced plans to begin repaying the more than 1 trillion euro in loans provided by the European Central Bank during the height of the euerozone crisis. In late trading, the FTSE 100Paris CAC and Germany’s DAX were up 0.1%, 0.5% and 1.3% respectively.

Asian shares were mixed. The Shanghai Composite was down 0.5%, the Hang Seng was off 0.1% while the Nikkei 225 was up 2.9%.

Jeremy Glaser has a position in the following securities mentioned above: MSFT. Find out about Morningstar’s editorial policies.