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Midday Market Update

Stocks Pare Losses; Data in Focus

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U.S. Market    
Stocks pared early losses this morning as the market focused in on economic data.

The closely-watched ISM manufacturing index rose to 54.2 in February from 53.1 in January. Economists had expected a decline to 52.5. The new orders index rose to 57.8 from 53.3 in the month, while the employment index fell to 52.6 from 54.0.  Any reading over 50 indicates an expansion in the manufacturing sector.

Consumer sentiment rose last month according to the Thomson-Reuters/University of Michigan index. The index reading of 77.6 was above the 76.3 expected by analysts. Inflation expectations remained unchanged, with consumers expecting prices to rise 3.3% this year.

Higher taxes sent personal income down a larger-than-expected 3.6% in January according to the Commerce Department. The decline in incomes did not cause fall in spending; personal consumption expenditures rose 0.2% in the month.

Construction spending unexpectedly declined 2.1% in January. The decline was driven by a 5.1% drop in private nonresidential construction and a decline in government spending. Residential spending was flat in the month.

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

Stocks on the Move
Shares of  Best Buy (BBY) rose 1.5% after the firm reported fourth-quarter results. Excluding one-time restructuring charges and goodwill impairments the firm earned $1.64 a share, above the $1.54 expected by analysts. U.S. same-store sales rose 0.9% in the quarter while online revenues rose 11%.  The results come after Best Buy said it had ended discussions with founder Richard Schulze about a buyout of the company.

It appears that  Gap's (GPS) identity crisis has come to a close, at least for the time being, as the company's merchandise  resonated strongly with its consumers during 2012. Fourth-quarter results were strong, supported by positive comps over all three months, with November reporting same-store sales up 3%, December rising 5%, and January increasing 8%. Total sales grew 10% with gross margins expanding nearly 480 basis points to 37.6%, helping the operating margin surpass the 12% the company had guided to earlier in the year. Shares rose 2.9% on the report.

Foreign Markets
European shares were mixed today. In late trading, the FTSE 100 was up 0.3% while Germany’s DAX and the Paris CAC were down 0.4% and 0.6% respectively.

Asian markets also started the month mixed. The Nikkei 225N rose 0.4%, the Shanghai Composite was off 0.3% while the Hang Seng dropped 0.6%.

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