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Midday Market Update

Stocks Rise After Inflation, Housing Data

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U.S. Market    
Stocks were higher this morning after Mondays’ big losses. 

The consumer price index fell 0.2% in March as gas prices fell 4.4% in the month. Economists had expected a 0.1% decline. Excluding volatile food and energy prices, the CPI was up 0.1% in the month. 

Housing starts rose 7% last month to the strongest level since June 2008. Analysts predicted a much more modest 1.7% increase.  New building permits fell 3.9% in the month. 

Industrial production rose 0.4% in March while capacity utilization rose to 78.5% from 78.3% in the month from February levels. The increase was driven by a 5.3% rise in output from utilities due to the unseasonably cold weather. Manufacturing was down 0.1% in the month.

At midday the DowS&P 500  and Nasdaq were up 0.9%, 1.1% and 1.3% respectively.

Stocks on the Move
 Johnson & Johnson (JNJ) reported strong first-quarter results that  slightly exceeded our expectations as well as consensus expectations. New drug launches drove the drug division's strong 11% year-over-year growth in the quarter. On the consumer front, Johnson & Johnson is turning the corner on correcting major manufacturing problems, and branding power appears strong with the reintroduction of several key over-the-counter drugs. In the quarter, the U.S. OTC business increased 14% versus the previous period. Litigation charges remain concerning. The company took $529 million in litigation charges in the quarter. Shares were up 2% at midday.

Shares of  Coca-Cola (KO) soared over 5% after the firm announced first-quarter results and a plan to refranchise its bottling business. The announcement that Coke will sell its distribution operations to (or swap territory with) five established bottlers is a reversal of the $12.3 billion 2010 deal that gave Coke more control over bottling. The firm also said that global volumes rose 4% in the quarter while earnings came in slightly ahead of expectations.

 Target (TGT) provided updated guidance for flat comp sales growth in the first quarter,  slightly below expectations for around 1% growth, citing weather-related weakness in sales for seasonal items. As a result of weak near-term sales trends, management expects first-quarter earnings to come in below its earlier guidance of $1.10 to $1.20 per share, but the company maintained its full-year guidance for adjusted EPS of $4.85 to $5.05 per share.  Shares fell 0.7% on the news. 

Foreign Markets
European shares continued their downward trend on growth worries. In late trading, the FTSE 100, Paris CAC and Germany’s DAX were down 0.6%, 0.7% and 0.4% respectively.

Asian markets were mixed on the day. The Shanghai Composite rose 0.6% on the day, whole the Nikkei 225 and Hang Seng were off 0.4% and 0.5% respectively. 

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