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Midday Market Update

Stocks Lower After Disappointing Data

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U.S. Market    
Stocks fell this morning after disappointing data in the U.S. and Europe.

The closely watched eurozone composite purchasing managers index (PMI) fell to a preliminary reading of 47.3 in February from 48.6 in January according to Markit. Economists had expected a much more modest decline. The reading implies that the economic slowdown in the eurozone is continuing unabated and that GDP is likely to shrink again in the first-quarter.

Initial unemployment claims rose a larger-than-expected 20,000 to 362,000 last week. The less volatile four-week average rose 8,000 to 360,750. Despite the increase, the claims data still points to a slowly improving labor market.

Existing home sales were up 0.4% in January from December levels and were 9.1% above January 2012 levels according to the National Association of Realtors.  The Realtors also said that the number of homes listed for sale in the month (1.74 million) was the smallest supply since 1999.

Consumer prices were unchanged in January. Excluding volatile food and energy prices, the consumer price index rose 0.3% in the month. Economists had expected a 0.1% overall increase in the CPI.

The Philly Fed Index, which measures manufacturing activating in the mid-Atlantic region, fell to -12.5 in February from -5.8 in January. Analysts had expected the index to move into positive territory this month. 

At midday the Dow, S&P 500 and Nasdaq were down 0.5%, 0.6% and 0.8% respectively.

Stocks on the Move
 Wal-Mart (WMT) issued first-quarter earnings guidance below current estimates, mainly driven by a lower comparable-store sales outlook due to the impact of the payroll tax increase. Fourth-quarter comparable-store sales came in at positive 1% at domestic stores, at the low end of management's range and below consensus. Comp sales at U.S. stores declined 50 basis points on a sequential basis and fell 30 basis points on a two-year rate basis, from 2.8% in the prior quarter to 2.5% this quarter. Fourth-quarter consolidated operating margin declined 10 basis points to 6.7% compared with 6.8% in the year-ago period. The firm also raised its annual dividend 18%. Shares of the retail giant were up 2.8% on the report.

 Chesapeake Energy (CHK) reported  fourth-quarter and full-year 2012 results Thursday. Production for the quarter came in at 3.9 billion cubic feet equivalent per day (Bcfe/d) down 5% sequentially as a result of the company’s Permian asset sale (volumes would have been flat otherwise). The company guided to full-year operating cash flow of $5 billion and total capital expenditures of $9 billion (including drilling & completion costs of $6 billion and leasehold acquisition costs of $400 million). The resulting $4 billion funding gap is expected to be closed with between $4 billion and $7 billion in asset sales. Shares were up 0.4% on the day.

Foreign Markets
European markets were down on growth fears. In late trading, the FTSE 100, Germany’s DAX and Paris CAC were down 1.5%, 1.9% and 2.2% respectively.

Asian shares also sold off today. The Shanghai Composite plunged 3%, the Nikkei 225 was down 1.4% while the Hang Seng was off 1.7%.

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