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Midday Market Update

Stocks Slip into the Red Midday Thursday

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U.S. Market
U.S. stocks slid into negative territory midday Thursday, as investors digested mixed earnings news and the ECB's decision to stand pat on rates.  

The European Central Bank held rates unchanged Thursday and said that it intends to keep rates at the present or possibly even lower levels for an "extended period" and that its monthly bond-buying program would run until at least March 2017, or beyond if necessary.

At midday the Dow was off 0.4%, the S&P 500 slid 0.3%, and the Nasdaq fell 0.2%.

Stocks on the Move
Shares of mining-equipment manufacturer  Joy Global (JOY) were up 17.8% Thursday after Komatsu Ltd. said it has agreed to acquire Joy Global for about $2.9 billion in an all-cash deal. "Long term, this transaction will make Joy Global-Komatsu a mining equipment firm with a complete product suite and better able to compete with Caterpillar's comprehensive mining equipment product line,"  said Morningstar senior equity analyst Kwame Webb. Webb, who said he doubts this deal would be blocked by antitrust regulators, plans to raise Joy's $19 fair value estimate to reflect Komatsu's offer price.

 eBay (EBAY) shares jumped 11.9% after the online marketplace posted its second straight quarter of sales gains. Morningstar consumer strategist R.J. Hottovy said he  plans to raise our $25 fair value estimate by a few dollars based on the better-than-expected results from Marketplaces and StubHub. However, Hottovy cautions that while eBay presents investors with a compelling capital allocation story--especially with a new $2.5 billion share repurchase authorization--he views the shares as fairly valued and finds more compelling value in wide-moat  Amazon (AMZN).

Shares of  Intel (INTC) fell 4.3% after the chipmaker reported slower-than-expected growth in chip sales for data centers Wednesday. Management once again blamed the lumpy nature of cloud spending, while claiming the second half of 2016 will be considerably stronger, said Morningstar equity analyst Abhinav Davuluri. "While we agree with this sentiment, especially when considering the latest 14-nanometer-based Broadwell server CPUs is set to hit the market, the DCG segment remains a concern," Davuluri said. He is maintaining Intel's $31 fair value estimate, however, as he believes tepid top-line growth for 2016 is offset by the ongoing cost reduction efforts.

 Southwest Airlines Co (LUV) dropped 8.7% Thursday. Though the airline reported profits that beat expectations in the most recent quarter, propelled by cheap fuel and unit-revenue growth, it warned of a revenue slowdown in the current quarter. 

Shares of  Biogen (BIIB) rose 6.7% after the company said Thursday that it beat second-quarter earnings expectations. The biotech company also said that CEO George Scangos would be leaving in the coming months, and announced a $5 billion share buyback.

Foreign Markets
European stocks were mixed. The FTSE 100 fell 0.4%, the Paris CAC slid 0.1%, and Germany's DAX gained 0.1%.

Asian markets were higher. The Shanghai Composite gained 0.4%, the Nikkei 225 was up 0.8%, and the Hang Seng rose 0.5%. 

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