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Midday Market Update

Stocks Mostly Lower After Jobs Data

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U.S. Market    
Stocks were mostly lower this morning after July’s payroll report fell short of expectations.

The U.S. economy added 162,000 jobs last month, below the 183,000 expected by economists. The unemployment rate fell to 7.4% from 7.6%, the lowest level since the end of 2008. May and June’s payroll numbers were lowered by a combined 26,000. Average earnings fell 2 cents to $23.98 an hour while the workweek fell 0.1 hour to 34.4.

Consumer spending rose 0.5% in June from the previous month, in line with analyst expectations. Spending was boosted by a rise in both nondurable and longer lasting goods including strong auto sales. The price index for personal consumption expenditures was up 1.3% year-over-year, below the Fed’s long-term target. Incomes rose a smaller-than-excepted 0.3% in the month.

Factory orders were up 1.5% in June from May levels. Economists had expected a more robust 2.3% gain. The increase was mostly driven by a 32% rise in the volatile civilian aircraft category. Excluding transportation, orders were down 0.4%. 

At midday the Dow was down 0.2%, the S&P 500 was off 0.1% while the Nasdaq was unchanged. 

Stocks on the Move
Shares of  Chevron (CVX) fell 2.3% after the firm reported a 26% fall in second-quarter earnings. Exploration and production earnings dropped 12% as production fell 1.65%. Downstream earnings were off 59% due to lower margins and higher repair expense. Overall operating margin fell to 15% from 19.6%.

 Viacom's (VIAB) fiscal third-quarter  results were strong, as audience ratings at the firm's networks are helping improve advertising growth and affiliate fee growth continues to improve thanks to a new licensing deal with Amazon. Media networks revenue increased 13% to $2.6 billion, driven by 4.6% higher advertising and 26% affiliate fee growth (high single digits without the lumpy licensing deal with Amazon). Domestic advertising revenue improved 6% based on ratings improvement at key networks, mainly Nickelodeon, and the company expects continued acceleration into the current quarter. Domestic affiliate fee revenue increased in the high-single-digit percentage range on a comparable basis. What was most impressive in the quarter was the adjusted cable network operating margin improvement to 45.1%, up 390 basis points. Shares were up nearly 6% at midday.

The  Dell (DELL) board of directors agreed to a sweetened buyout deal from Michael Dell and Silver Lake Partners this morning in exchange for a change in voting rules that will make it easier for the transaction to gain shareholder approval. The buyout group will now pay $13.75 a share, up 10 cents from the previous offer, pay out a $0.13 special dividend and guarantee the payout of the third-quarter dividend of $0.8. Dell shares rose over 5% on the news.

 LinkedIn (LNKD) posted second-quarter results that  modestly surpassed our estimates for revenue and earnings late Thursday. Quarterly revenue was strong across all three segments (talent solutions, marketing solutions, and premium subscriptions), growing 59% versus a year ago. Talent solutions represented 56% of total company revenue during the quarter, as total enterprise customers grew more than 65% versus 2012. Shares were up 11% at midday.

Foreign Markets
European markets were mixed today. In late trading, the FTSE 100 was down 0.5%, Germany’s DAX was unchanged while the Paris CAC  was up 0.1%.

Asian shares were mostly higher on the day. The Shanghai Composite was flat, the Hang Seng rose 0.5% while the Nikkei 225 soared 3.3%. 

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