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Midday Market Update

Stocks Fall After Data, ECB Comments

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U.S. Market
Stocks fell this morning after economic data, earning s and comments from European Central Bank head Mario Draghi.

Initial jobless claims fell 5,000 last week to 366,000. The less volatile four-week moving average dropped 2,500 to 350,500, the lowest level since March 2008. 

Productivity fell 2.0% in the fourth-quarter of 2012 while labor unit costs rose 4.5%. Economists had expected productivity to fall 1.6% and labor unit costs to rise 3.2%. For the full year, productivity was up 1.0%.

As expected, The European Central Bank (ECB) left its key benchmark interest rate unchanged today.  President Mario Draghi said that he expects a eurozone recovery later this year, but that risks are still weighted to the downside and that the bank would remain accommodative. He also indicated that the strengthening euro could be a headwind to recovery.

At midday Dow and Nasdaq were each off 0.9% while the S&P 500 was down 0.8%.

Stocks on the Move
 Exelon (EXC) management announced on Thursday along with its 2013 earnings results that it  plans to cut its dividend to a $1.24 per share annualized rate starting with its second-quarter 2013 payment. Exelon's full-year adjusted earnings per share were $2.85, in line with our estimate but 31% lower than 2011 results primarily because of lower earnings at the Exelon Generation subsidiary. Lower wholesale generation margins and higher costs sank Exelon Generation's earnings to $283 million in the fourth quarter, down 21% year over year. Shares were up 1.8% at midday.

 Sprint (S) posted uneven results in the fourth quarter, which is to be expected as Network Vision and the iDen network shutdown progress. Overall,  Sprint posted 3% revenue growth year over year, the slowest pace seen in 2012. Capital spending also continues to ramp up as Sprint enters the heaviest deployment phase of Network Vision. The combination of lower wireless margins and increased capital spending caused the firm to burn through $1.2 billion during the quarter. Shares fell 1.7% on the report.

Retail same-store sale growth was stronger than expected in January.  The 18 firms followed by Thomson Reuters reported 5.8% growth in same-store sales, above the 3.5% anticipated by analysts.   Macy's (M) raised its earning guidance after reporting a 12% rise in same-store sales.  Gap (GPS) beat estimates by posting an 8% boost in January same-store sales. Other firms including  Kohl's (KSS) and  Target (TGT) also had better-than-expected months.

Foreign Markets
European shares were mostly lower on the day. In late trading, Germany’s DAX was up 0.1% while the FTSE 100 and Paris CAC were down 0.9% and 1.1% respectively.

Asian markets fell today. The Hang SengShanghai Composite and Nikkei 225 were off 0.3%, 0.7% and 0.9% respectively.

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