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Midday Market Update

Stocks Mixed as Markets Eye Earnings, Data

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U.S. Market
Stocks sought direction at midday as corporate earnings reports continued to come in while economic data were mixed. 

Pending home sales in the United States dropped by 4.3% in December from November, though the reading remained above 100. The index was 6.9% higher from the same time last year, and the index has risen year over year for 20 straight months. However, the most recent reading countered the expected 1% increase, and the November reading was revised downward, leading to some concerns about the housing recovery. Also in construction-related news, building permits for last month were revised up by 1% from November. 

In a better sign for economic growth, durable-goods orders increased by 4.6% in December from the previous month, with defense goods leading the charge with an 110.4% monthly gain. The overall results exceeded expectations. 

Separately, the Federal Reserve Bank of Chicago reported a 0.7% December gain for its Midwest Manufacturing Index, while the Dallas Fed posted a monthly increase for its January business activity index. 

At midday, the S&P 500 was 0.1% lower, while the Nasdaq had gained 0.3%. The Dow was flat. 

Stocks on the Move
 Caterpillar (CAT) fourth-quarter earnings fell by 55% year over year to $1.04 per share, which was below expectations as the firm took on an acquisition-related charge. The firm also offered a lower EPS forecast for the year, but  Morningstar analysts are encouraged by Cat's strong reputation and perceived product advantage. Shares were up by 2.1% at midday. 

 Biogen Idec (BIIB) posted a slight drop in fourth-quarter net income, though shares were up by 3.1% at midday as management remains optimistic about regulatory approval for its multiple sclerosis drug.

 Barnes & Noble (BKS) had lost 1.9% at midday after a Wall Street Journal report Monday  revealed planned future closings of the book-seller's retail stores. 

Reported plans to close a refinery in New Jersey along with a possible $800 million share purchase by a third party brought  Hess (HES) shares 5.8% higher by midday. 

 Facebook (FB) shares had gained 3% on reports that Raymond James assigned an outperform rating to the social-networking firm. 

Foreign Markets
Strong December profits from Chinese industrial companies lifted the Shanghai Composite by 2.4%, and the Hang Seng gained 0.4%. The Nikkei 225, however, fell by 0.9%. 

In Europe, the FTSE 100 was 0.2% higher, while the Paris CAC was up by 0.1%. The DAX was down by 0.3%. 

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