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Midday Market Update

Stocks Eye New Highs Wednesday on Upbeat Earnings News

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U.S. Market
U.S. stocks were modestly higher midday Wednesday, eyeing their seventh straight record close.  

Stocks were particularly buoyed by better-than-expected earnings reports from Microsoft and Morgan Stanley, which helped investors regain some confidence lost after Netflix reported worse-than-expected earnings Tuesday.

At midday the Dow was up 0.2%, while the S&P 500 gained 0.4%, and the Nasdaq added 1.0%.

Stocks on the Move
 Microsoft (MSFT) shares rose 6.9% after the company reported sales of its Azure cloud computing service more than doubled in its fiscal fourth quarter, offsetting a decline in the segment that includes its flagship Windows operating system and its struggling mobile-phone business. "While the growth in these businesses will likely create pockets of weakness from a profitability perspective, we continue to believe products such as Azure, Office 365, Dynamics and other cloud-based initiatives will carry strong margin profiles in the long run,"  said Morningstar equity analyst Rodney Nelson. Nelson said he is maintaining Microsoft's wide economic moat rating, and we do not anticipate making a material change to our $61 fair value estimate. 

Shares of  Morgan Stanley (MS) rose 2.2% after the bank reported second-quarter earnings that beat lowered expectations. The bank's net income declined to $1.58 billion, or $0.7 a share, from $1.81 billion, or $0.85 a share, a year ago, and revenue fell 8.6% to $8.91 billion; however, consensus expectations were far more pessimistic. 

Foreign Markets
European stocks made gains. The FTSE 100 was up 0.5%, the Paris CAC was up 1.2%, and Germany's DAX gained 1.6%.

Asian markets were mixed. The Shanghai Composite fell 0.3%, the Nikkei 225 was off 0.3%, while the Hang Seng rose 1.0%. 

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