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Midday Market Update

Stocks Lower on Mixed Earnings, Data

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U.S. Market    
Stocks were down at midday following a handful of blue-chip earnings reports along with data that came in slightly ahead of expectations. 

The consumer-price index, a key measure of inflation, increased by 0.5% in June, beating the expected reading of a 0.4% gain. However, a jump in gasoline prices last month led much of the gain in CPI, and when subtracting food and energy prices from the data, prices increased by 0.2%. The CPI increase over last year is slightly below the Fed's inflation target of 2.0%. 

U.S. industrial production last month improved by 0.3%, and capacity utilization edged higher by 0.1%. Each reading was better than Wall Street economists had expected, with output of durable goods leading the way, but on an annualized basis, the manufacturing index fell during the second quarter. 

Meanwhile, the National Association of Home Builders reported its third consecutive month of improving sentiment, as its housing-market index rose to 57 in July, its highest mark since January 2006. Confidence for sales conditions during the second half of the year also improved among homebuilders. However, the NAHB also noted that rising mortgage rates are a threat to future sales and inventory. 

The Dow was 0.2% lower at midday. The S&P 500 was down by 0.4%, while the Nasdaq had lost 0.3%. 

Stocks on the Move
 Coca-Cola (KO) posted a 4% drop in second-quarter earnings, with net income at $2.68 billion compared with $2.79 billion the same time last year. Revenue also fell by 2.6%, and both earnings per share and total sales missed Street expectations. The firm's results were hindered by a slowdown in volume sales as well as higher input costs. Shares were down by 1.9% at midday. 

 Johnson & Johnson (JNJ) reported a second-quarter profit of $3.83 billion, well higher than the $1.41 profit the same time last year, though the firm had fewer special items on its books this time around. Adjusted earnings still came in ahead of expectations, as did revenue of $17.88 billion. The Big Pharma firm also raised its full-year EPS forecast range to $5.40-$5.47. The strength in new drug launches and the resiliency in the consumer group's performance reinforce the company's strong intellectual property and brand power,  according to Morningstar analysts. Shares were slightly higher at midday, up by 0.1%. 

 Goldman Sachs Group (GS) turned in a second-quarter profit of $1.93 billion, up from $962 million year over year. Revenue improved by 30% to $8.61 billion, and both readings exceeded expectations. The firm saw strong results from its fixed-income, currency, and commodity trading businesses along with solid performance in its investment banking segment. Goldman CEO Lloyd Blankfein said improving U.S. economic conditions led to higher client activity. Shares, however, were down by 1.6% at midday. 

Foreign Markets
Stocks in Asia were mostly higher, as the Shanghai Composite and the Nikkei 225 gained 0.3% and 0.6%. The Hang Seng was flat. 

European stocks, however, were lower. The FTSE 100 lost 0.5%. The Paris CAC fell by 0.7%, and the DAX lost 0.4%. 

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