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Midday Market Update

Stocks Lower After Earnings, Data

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U.S. Market    
Stocks were lower today after data and earnings.

Initial unemployment claims rose by 4,000 to 352,000 last week, slightly above expectations. The less volatile four-week moving average rose 2,750 to 361,000. The data is consistent with a slowly improving job market. 

The Philly Fed Index dropped to 1.3 in April from 2.0 in the previous month. Economists had expected an increase to 4.0. Any reading over zero shows growth in Mid-Atlantic manufacturing activity. 

At midday the DowS&P 500  and Nasdaq were down 0.3%, 0.4% and 0.8% respectively. 

Stocks on the Move
Shares of  eBay (EBAY) fell nearly 5% after the firm announced fiscal quarterly results. Revenue and earnings-per-share forecasts fell modestly short of consensus expectations. We believe this was the result of a cyclical softness in Europe; recently acquired Marketplaces and PayPal users (who tend to be less engaged than established users); and increased search, data, and site operation investments. 2013 forecast targets remain unchanged at $16.0 billion-$16.5 billion in revenue and adjusted EPS of $2.70-$2.75.

 UnitedHealth Group (UNH) reported first-quarter results Thursday that were mainly  in line with our current expectations. Year-over-year total revenue grew 11.2% to $30.34 billion with operating margins compressing 144 basis points to 7.05%. The firm's Medical loss ratio increased to 82.75% from 80.95% in the previous quarter. This development is not unexpected given the upcoming ACA mandates, pricing pressure, and business mix shift for UnitedHealth. Shares dropped 3.3% on the report. 

 PepsiCo (PEP) produced  solid results during its first quarter and is on track to meet its 2013 objectives, which include 7% constant currency core earnings per share growth, and return $6.4 billion to its shareholders via dividends and share repurchases. The firm posted solid growth in its Americas food segment and international operations. Worldwide snack volume rose 4%, as Frito-Lay North America (up 4%), Quaker North America (up 5%), Latin America foods (up 1%), and AMEA snacks (up 15%) all increased volume.  Shares were up 4% at midday.

Foreign Markets
European shares were mostly lower today. In late trading, the FTSE 100 and Paris CAC were little changed while Germany’s DAX was down 0.4%.

Asian markets were mixed. The Shanghai Composite was up 0.2%, while the Hang Seng and Nikkei 225 were down 0.3% and 1.2% respectively. 

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