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Midday Market Update

Stocks Choppy After Earnings, Data

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U.S. Market    
Stocks were choppy this morning after economic data and retail-sector earnings reports.

U.S. fourth-quarter GDP was revised upwards to a gain 0.1% from the originally reported contraction of 0.1%.  Economists had expected the revision to show 0.5% growth. The increase was driven mostly by changes to international trade data.

Initial jobless claims fell 22,000 last week to 344,000. Analysts had expected claims of 365,000 in the week. The less volatile four-week moving average dropped 6,750 to 355,000, consistent with a steady improvement in the labor market.

At midday the Dow was up 0.1% while the S&P 500 and Nasdaq were each up 0.2%. 

Stocks on the Move
Shares of  J.C. Penney (JCP) fell over 18% after the firm reported  continued comparable-store sales declines and poor financials for the holiday quarter late Wednesday. The company now has $3 billion in liquidity counting credit lines and $930 million in cash less $85 million in shifted payables, and it used only $10 million in cash from operations. This surprisingly small operating cash drain came despite reporting a loss of $985 million for the year, or $776 million excluding charges, driven by a 25% decline in sales and a 4.7-percentage-point decline in gross margins.

 Sears Holdings (SHLD) also had a disappointing quarter.  The retailer reported a loss of $489 million as revenue slipped 1.8% and gross margin expanded to 25.8% from 24.5%. The quarter also included a number of special charges related to pensions and other impairment charges. Shares fell over 5% on the report.

 Kohl's (KSS) reported a 17% decline in fourth-quarter earnings this morning primarily due to larger markdowns on merchandise. Total sales were up 5.45% to $6.34 billion while gross margins declined to 33.3% from 36.2%. Shares fell over 1% on the report.

Foreign Markets
European markets were higher on the day. In late trading, the FTSE 100, Germany’s DAX and Paris CAC were up 0.7%, 0.8% and 0.9% respectively.

Asian shares surged after Wednesday’s rally in U.S. markets.  The Nikkei 225 was up 2.7%, the Shanghai Composite advanced 2.3% while the Hang Seng tacked on 2.0%.

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