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Midday Market Update

Stocks Mixed After Trade Data

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U.S. Market    
Stocks sought direction at midday as investors eyed several economic data reports. 

The Commerce Department said the U.S. trade deficit expanded in April with imports increasing by $5.4 billion during the month and exports rising by only $2.2 billion. The trade gap of $40.3 billion was lower than the expected measure of $41.5 billion, but it still points to improving consumer-spending trends. However, the weaker exports are also indicative of economic struggles abroad, which are inhibiting U.S. growth. 

Separately, the Institute for Supply Management said the current business conditions index for the New York metropolitan area decreased to 54.4 last month from April's reading of 58.3. Although the index still shows that activity is expanding, the subindexes for the month were less-than-inspiring. 

The Dow and the S&P 500 were 0.1% lower at midday, while the Nasdaq was flat. 

Stocks on the Move
 Salesforce.com (CRM) announced it has agreed to acquire digital marketing firm ExactTarget (ET) for approximately $2.5 billion in cash. This deal represents Salesforce.com's largest acquisition yet, as the company focuses on building out its marketing cloud. The $33.75 per share acquisition price represents a 52% premium to Monday's closing price, or 6.6 times median consensus revenue for 2013. Although ExactTarget's product portfolio and customer base are complementary to Salesforce.com's existing marketing cloud products,  Morningstar analysts believe the deal may be too richly priced. ET shares soared by 52.5% on the deal, while Salesforce shares slipped by 2.8%. 

 Dollar General (DG) posted a first-quarter profit increase of 3.1% and a revenue gain of 8.5%. Both readings missed Wall Street expectations.  Management also lowered the top end of its guidance range for top-line growth (to 10%-11% from 10%-12%), same-store sales growth (to 4%-5% from 4%-6%), and earnings per share ($3.15-$3.22 from $3.15-$3.30) for 2013, reflecting new expectations for gross margin contraction due to an unfavorable mix shift to lower-margin consumable items. Shares had sunk by 7.6% at midday. 

Foreign Markets
European stocks were up Tuesday, with the FTSE 100 gaining 0.5%, and the Paris CAC and the DAX each rising by 0.1%. 

Stocks in Asia were mixed, as the Shanghai Composite fell by 1.2%, but the Nikkei 225 gained 2.1%. The Hang Seng was flat. 

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