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Midday Market Update

Stocks Higher With Earnings, Data in Focus

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U.S. Market    
Stocks were up at midday on a bevy of earnings reports along with upbeat housing data. 

The rate of seasonally adjusted new-home sales in the United States rose by 1.5% in March, countering a February decline. The readings nearly met Wall Street estimates, and the number of new homes listed for sale on a seasonally adjusted basis was the highest in more than a year. Separately, the Federal Housing Finance Agency said that its February home-price index increased by 0.7%, slightly ahead of Street estimates. Year-over-year prices were 7.1% higher, and the numbers in each housing report are indicative of improving conditions. 

Not all economic data was favorable, however, as the Federal Reserve Bank of Richmond said its current business conditions index fell to negative 6 in April, a sign of contracting activity in the bank's region and down from March's positive reading of 3. The Markit flash purchasing managers' index for the U.S. also dropped to 52.0 this month from March's tally of 54.6. Although the index is still in expansion territory, it was the worst reading in six months. 

At midday, the Dow and the S&P 500 were each 1.0% higher, while the Nasdaq had gained 1.2%. 

Stocks on the Move
Late Monday,  Netflix (NFLX) reported a first-quarter per-share profit of $0.05, up from the loss of $0.08 the same time last year. When excluding one-time debt-related items, the firm posted earnings per share of $0.31, well ahead of Street expectations, as was the number of streaming video subscribers. Netflix's revenue also improved by 18% from the same time last year, and the firm announced a new pricing package for customers to stream multiple videos simultaneously. Shares had soared by 24% at midday.

 Discover Financial Services (DFS) reported a 3.5% increase in first-quarter earnings, ahead of expectations. Although loan-loss provisions increased, the firm's credit card delinquency rate fell. Shares had gained 1.6% by midday. 

 United Technologies (UTX) posted a sharp increase in first-quarter profit to $1.27 billion from $330 million the same time last year, though last year's quarter included special items. Revenue also improved by 16% year over year. Despite the improvements, the results were slightly lower than Street estimates. By midday, shares had lost 1.4%. 

 Lockheed Martin (LMT) announced a year-over-year increase in quarterly net income and a decline in total revenue. Much focus for the company and its investors is on the potential impact of budget cuts to the U.S. defense sector, though the firm maintained its full-year forecast. Shares were 1.5% higher at midday. 

 Xerox (XRX) also reported an increase in quarterly earnings and a drop in revenue on account of declining demand for its printing and copying products. The firm announced a second-quarter EPS forecast of $0.19-$0.21, lower than Street estimates. Shares were flat at midday. 

Foreign Markets
The Shanghai Composite fell 2.6% Tuesday following a weaker-than-expected Chinese PMI. The Hang Seng was also 1.1% lower, while the Nikkei 225 lost 0.3%. 

Stocks in Europe, however, shook off potential economic concerns and rose across the board. The FTSE 100 was up 2.0%, and the Paris CAC and the DAX had gained 3.6% and 2.4%. 

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