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Midday Market Update

Stocks Higher Following Jobs Data

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U.S. Market    
Stocks were up at midday as tepid job growth allowed markets to be optimistic about the Fed likely not tapering its bond-buying program anytime soon. The Fed's next policy meeting is scheduled for next week. 

The Bureau of Labor Statistics released its government-shutdown-delayed nonfarm payrolls report for September, which showed the number of jobs increased by 148,000 for the month compared with August, lower than expected estimates of 180,000. August's reading was revised upward, but July's was revised downward. The unemployment rate, which was expected to remain flat, fell by 10 basis points to 7.2%. The September report does not include effects of the government shutdown, which began Oct. 1. However, the October jobs reports is now delayed, as well, with a new release date of Nov. 8. 

The Dow was 0.4% higher at midday. The S&P 500 had gained 0.5%. The Nasdaq was up by 0.2%. 

Stocks on the Move
After jumping initially in after-hours trading Monday following the release of third-quarter results,  Netflix (NFLX) shares were down by 4.3% at midday. The company's profit quadrupled compared with the same time last year, beating expectations, and its revenue was in line with estimates. The number of Netflix's subscribers rose, but  Morningstar analysts say that despite having a more optimistic view of Netflix's business, they still disagree with the notion that incremental subscribers will allow for endless operating leverage. 

Also late Monday,  Discover Financial Services (DFS) reported net income of $593 million, or $1.20 per diluted share for the third quarter of 2013. Discover managed to increase credit card loans by 4% during the year,  a reasonable pace given the lackluster environment for consumer lending. At the same time, the company charged off only 2.05% of loans, maintaining excellent credit quality. Shares, however, were 3.2% lower at midday, as earnings per share fell short of Wall Street expectations. 

Ahead of Tuesday's investor day,  TJX Companies (TJX) management raised third-quarter and fiscal 2014 outlook and reiterated its three-year revenue and earnings per share growth targets of 6%-7% and 10%-13%, respectively.  Embedded in these three-year targets are 4%-5% square footage growth, 2% comparable-store sales growth, 1%-2% contribution from segment margin expansion, and 3%-4% contribution from share repurchases. Shares were up by 1.8% at midday. 

 Kimberly-Clark (KMB) shares were up by 2.9% at midday as the company reported a 5.6% year-over-year gain in third-quarter earnings and a slight gain in revenue, with each reading beating expectations. The company also raised the low end of its full-year EPS outlook.  Morningstar analysts point out that Kimberly-Clark continues to withstand the challenges resulting from intense competitive activity and lackluster macro conditions.

 RadioShack (RSH) shares had plummeted more than 20% by midday as the electronics retailer posted a steeper loss of $112.4 million compared with $47.1 million the same time last year. Revenue fell, as well, and each reading was well lower than Wall Street forecasts

Foreign Markets
Stocks in Asia were mixed Tuesday, as the Shanghai Composite and the Hang Seng fell by 0.8% and 0.5%. The Nikkei 225 gained 0.1%. 

In Europe, the DAX was up by 0.9%, and the Paris CAC was 0.4% higher. The FTSE 100 had gained 0.6%. 

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