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Midday Market Update

Stocks Move Modestly Higher; GDP, Earnings Eyed

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U.S. Market    
Stocks pared early losses as investors considered GDP data and earnings.

The U.S. economy grew by 1.2% in the second-quarter, well below the 2.6% rate expected by economists. Personal consumption rose by 4.2%, but weak business spending and a reduction in inventories hurt the headline number.

Consumer sentiment slipped to 90.0 at the end of July from 93.5 in June according to the University of Michigan survey. The survey indicated that upper-income households seem to be concerned about global economic events, notably Brexit. 

The Chicago PMI dropped slightly to 55.8 in July from 56.8 in June. Any reading over 50 indicates an expansion in Chicago-area manufacturing activity.

At midday the Dow was down 0.1%, the S&P 500 gained 0.2% while the Nasdaq was 0.3% higher.

Stocks on the Move
 Alphabet (GOOG) (GOOGL) reported solid second-quarter numbers surpassing all expectations. Strong growth in ad revenue, in addition to margin expansion, clearly displayed the wide moat-rated company’s dominant position in the online search market and its ability to gain traction in the cloud market. Shares gained 4.8% on the report.

 Amazon's (AMZN) second quarter largely built upon last quarter's themes, including a more visible margin expansion story in North America through Prime memberships and third-party sales, a strengthening network effect across its international markets, and Amazon Web Services asserting its leadership position in cloud infrastructure. Shares rose 1.7% at midday.

Shares of  Exxon Mobil (XOM) slipped almost 2% today after the firm reported worse-than-expected results. Earnings of 41 cents per share were below the $1 per share earned in the year-ago-expectations and expectations of 64 cents per share. The underperformance comes against the backdrop of a volatile energy-price environment and as Exxon slashes its capital spending budget. 

 Chevron (CVX) said its revenue decline was smaller than expected but that it did lose 78 cents a share due to $2.8 billion in non-cash charges. Shares were little changed on the report.

Foreign Markets
European markets were higher today. The FTSE 100 was up a modest 0.1% while the Paris CAC and Germany’s DAX were 0.4% and 0.6% higher respectively.

Asian shares were mixed. The Nikkei 225 rose 0.6%, the Shanghai Composite fell 0.5% while the Hang Seng was down 1.3%.

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