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Midday Market Update

Stocks Waver; Bernanke, Data, Italy in Focus

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U.S. Market    
Stocks pared earlier gains and were mixed at midday as markets weighed upbeat data with Federal Reserve chairman Ben Bernanke's comments to Congress and political uncertainty in Italy. 

As part of a semiannual appearance in front of Congress this morning, Bernanke reiterated that the Fed will continue its bond-buying program, lauding the benefits of the asset purchases. He also said he hopes Congress can reach an agreement on spending and budget cuts amid the looming sequestration. 

Concerns resonated in global markets following the inconclusive parliamentary election results in Italy, which led to a jump in Italian short-term bond yields, as the lack of a clear winner leaves open to question how the country will move forward with its austerity measures. 

Back stateside, economic data was mostly positive Tuesday morning. The Standard & Poor's Case-Shiller home-price indexes increased in December, with the 10- and 20-city indexes each rising 2% from November, though only 0.9% seasonally adjusted. Year over year, the 10-city index improved by 5.9% and the 20-city reading rose by 6.8%, better than expected. The Federal Housing Finance Agency's home-price index also rose in December, with a 0.6% seasonally adjusted gain from November and a 5.8% year-over-year increase. 

Meanwhile, consumer confidence rose to a much better-than-expected index reading of 69.6 this month, compared with the forecast gain of 62. The increase was more than 11 points higher from January's reading of 58.4, with the subindexes showing solid gains. 

The Dow was up by 0.5% at midday, and the S&P 500 was 0.1.% higher. The Nasdaq was down by 0.2%. 

Stocks on the Move
 Home Depot (HD) reported a 32% gain in fourth-quarter earnings and a 14% rise in revenue, with both readings exceeding Wall Street expectations, though the firm noted that it had an extra week in the most recent quarter to improve comparisons. Shares had jumped by 5.3% at midday. 

 Macy's (M) fourth-quarter profit fell slightly by 2% as the firm took on extra expenses during the quarter. The firm had previously reported a 7.2% increase in sales, and its full-year earnings-per-share forecast of $3.90-$3.95 is ahead of Wall Street expectations. Shares were up by 2.8% at midday. 

 RadioShack (RSH) shares were up by 3% at midday despite the firm posting a per-share loss and a revenue decline that was worse than expected. The firm acknowledged the challenging conditions for the first half of this year. 

 AutoZone's (AZO) second-quarter sales and earnings increased year over year, though not by as much as expected, with same-store sales falling. The firm anticipates normalizing sales conditions in the coming months. Shares were down by 1.3% at midday. 

Foreign Markets
European stocks sank on fears that Italian election uncertainty could lead to fiscal woes elsewhere. The DAX lost 2.3%, and the Paris CAC fell by 2.7%. The FTSE 100 was 1.3% lower. 

Asian markets were also weak, with the Shanghai Composite and the Hang Seng losing 1.4% and 1.3%, while the Nikkei 225 fell by 2.3%. 

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