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Midday Market Update

Stocks Mostly Higher; Earnings, Debt Deal Eyed

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U.S. Market    
Stocks were mostly higher this morning as the market digested earnings and yesterday’s deal to reopen the government and lift the debt ceiling.

Initial unemployment claim fell 15,000 to 358,000 last week, above the 330,000 claims expected by economists. The claims data remains noisy due to the government shutdown and continued problems with California’s new processing system. 

The Philly Fed index fell to 19.8 in October from 22.3 in September, well above expectations of 15.0. The reading indicates a continued expansion in the Mid-Atlantic manufacturing sector.

At midday the S&P 500 and Nasdaq were each up 0.3% while the Dow was down 0.3%.

Stocks on the Move
While customer growth slowed versus a year ago,  Verizon (VZ) continues to take market share. We view this  share growth as impressive given the increased competitive efforts of rivals, especially  T-Mobile US (TMUS). With wireless services revenue growing 8.4% versus a year ago, device activations holding fairly steady, and cost-cutting efforts bearing fruit, Verizon Wireless produced record margins during the quarter. On the fixed-line side, the strength of Verizon's FiOS network and efforts to migrate customers from legacy copper-based technology produced solid Internet and television customer additions while driving revenue per customer higher. While the enterprise and wholesale businesses continue to struggle against weak employment growth, government spending cuts, and shifting technology, total fixed-line revenue declined only 1% year over year. Verizon shares rose 3.6% on the report.

Shares of  IBM (IBM) fell almost 6% after the firm reported  disappointing third-quarter results. Total revenue declined 4% year over year to $23.7 billion, and while non-GAAP earnings per share grew 10% from the year-ago quarter to $3.99, gross profit and operating income posted mid-single-digit declines. A number of headwinds are impeding IBM's growth. U.S. federal budget pressures, weak demand out of China, hardware commodification, and increasing competition among enterprise software vendors will continue to be issues in the fourth quarter and into 2014. 

 eBay (EBAY) posted  strong third-quarter results but modestly softer-than-expected fourth-quarter revenue and earnings per share guidance sent shares down over 3.5%. User growth was the clear highlight from the quarter, with Marketplaces users growing 14.1% to 124 million (the fourth consecutive quarter of double-digit growth) and PayPal growing 17% to 137 million active accounts (representing more than 15 straight quarters of double-digit growth). New active user growth helped to drive enabled commerce volume of $51.5 billion during the quarter (an increase of 21% year over year).

Foreign Markets
European shares were mostly lower. In late trading, the FTSE 100 was flat, the Paris CAC was down 0.1% while Germany’s DAX was off 0.4%.

Asian markets were mixed on the day. The Shanghai Composite was off 0.2%, the Hang Seng as down 0.6% while the Nikkei 225 was up 0.8%.

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