Google cheers Street; stocks end flat

The search giant's shares jump after results beat estimates. The market withstands selling pressure from bad news on jobs and inflation and more banking worries. Gold briefly hits $1,388.

By Charley Blaine Oct 14, 2010 1:41PM

Charley BlaineUpdated: 7:52 p.m. ET


Investors spent most of the day fretting about the stock market, hoping it would hold together.


It did. And then Google (GOOG) reported better-than-expected third-quarter earnings, and shares jumped nearly 9% after hours. That could give stocks a lift on Friday, when General Electric (GE) reports its third-quarter results. Futures trading suggests a strong market open.

In the meantime, the Dow Jones industrials ($INDU) ended the day down just 2 points to 11,095. The Standard & Poor's 500 Index ($INX) was off 4 points to 1,174, and the Nasdaq Composite Index ($COMPX) was off 6 points to 2,435.


Google clobbers estimates
Google shares were up 8.9% to $588.90 after hours after ending down 0.4% to $540.93 in regular trading.

The Internet search company said it earned $7.64 a share after one-time expenses on revenue of $5.48 billion. The revenue figure is after payments to advertising partners. Google

The earnings were up 29.7% from a year ago and beat analyst estimates of $5.89 a share.

Revenue was up 25.1% from a year ago and beat the Street estimate of $5.25 billion. Using generally accepted accounting, Google's revenue was $7.29 billion, up 23% from a year ago.

Non-U.S. revenue of $3.77 billion -- 52% of Google's total -- was helped by a lower dollar. Without the dollar's decline, revenue would have been $3.68 billion.

Meanwhile, shares of semiconductor maker Advanced Micro Devices (AMD) were up 3.9% to $7.42 after hours. The company earned 15 cents a share, beating Street estimates of 9 cents. Revenue was up 15.7% to $1.6 billion, in line with estimates. The shares had slipped 1.1% to $7.14 in regular trading.

Market might have fallen apart -- but didn't
Heaven knows there were plenty of reasons for a sell-off: Jobless claims were a tad worse than expected. Producer prices -- especially food and energy prices -- were higher. The dollar fell to a 10-month low. Gold was higher.

And there was a great unease growing around financial stocks because of the uncertainties surrounding the processing of home foreclosures.

But each time the market looked like it was about to fall apart, and the S&P 500 dropped to its 10-day moving average, buying would materialize, giving the market support. That could well be actions of computers programmed to send out buy orders on any dips.  Computerized trading is estimated to account for up to 70% of all trading volume in U.S. markets.

So, the declines were not be terribly deep, but they were broad. Only 12 of the 30 Dow stocks showed gains this afternoon, led by McDonald's (MCD), up 1.7% to $77.04. In addition, only 34 stocks in the Nasdaq-100 Index ($NDX.X) were higher; the index was off 3 points to 2,055.
Energy prices -- New York close
 

Thur.

Wed.

Month chg.

YTD chg.
Crude oil 

$82.69

$83.01

3.40%

4.20%
(per barrel)











Heating oil

$2.2839

$2.3007

-6.40%

7.96%
(per gallon)











Natural gas 

$3.6570

$3.6960

-5.55%

-34.37%
(per mil. BTU)











Unleaded gasoline

$2.1365

$2.1661

4.48%

4.07%
(per gallon)











Retail gasoline

$2.8280

$2.8200

5.17%

7.16%
(per gallon; AAA)












The dollar continues to slide
The dollar was lower against major currencies. The British pound was trading at $1.60, up from $1.59 on Wednesday and up 11% from its lows in June.

The U.S. Dollar Index, which measures the greenback against a basket of currencies, was at 76.881, down 0.406 and the lowest close since Dec. 14, 2009. It had been as low as 76.475 today. The index was up 13% on the year on June 8. It's now down 1.6%.

Gold hit a new intraday high of $1,388.10 an ounce before falling back and settling at $1377.60, up $7.10.

Crude oil settled down 32 cents to $82.69 a barrel. Energy shares were lower. The cause: A government report showed U.S. petroleum demand dropped to the lowest level in more than 10 months as the economy struggled to recover.

Corn settled down 2 cents to $5.6725 a bushel. Corn is up 39% this year on a combination of drought problems and smaller-than-expected U.S. crops. Wheat is up 30%.

Interest rates were lower, with the 10-year Treasury yield rising to 2.495% from 2.431% on Wednesday.  

Financial stocks sag
Financial stocks, which weakened sharply late on Wednesday, were the weak links again today.

Bank of America (BAC) was the worst performer among the 30 Dow stocks, down 5.2% to $12.60, largely because of worries that it is vulnerable to the problems in mortgage foreclosures.

JPMorgan Chase (JPM) was off 2.8% to $38.72. Wells Fargo (WFC) was off 4.2% to $24.72.
 
General Electric (GE), which is very nearly a financial company, was off 0.7% to $17.16. GE reports third-quarter earnings before Friday's open.

The great fear is that foreclosures will grind to a halt because the documentation fiasco means no one can prove who actually owns homes and other property. That could stifle real-estate activity. Worse, investors who bought mortgage-backed securities from financial institutions may sue and win, forcing banks to take back soured loans.
That could unleash another banking crisis, Anton Schutz, who manages $250 million of financial stocks at Mendon Capital Advisors in Rochester, told Bloomberg News.

Jobless claims disappoint
The Labor Department reported that first-time claims for unemployment benefits jumped 13,000 to 462,000 in the week ended Oct. 9. Last week's figure was revised upward by 4,000 to 449,000. Economists had been expecting a small increase to 450,000.


The Labor Department also said wholesale prices rose 0.4% in September after rising 0.4% in August. Analysts had expected an increase of 0.2%, according to Briefing.com. The core rate, which excludes volatile food and energy prices, inched up to 0.1%, in line with expectations.


It's the food and energy part, however, that is worrying economists. Corn and wheat prices have jumped substantially and are starting to affect food prices. Crude oil is up 14.5% since July 2, and the retail price of gasoline is up 6% since Aug. 31.


Separately, the Commerce Department said the trade deficit widened to $46.3 billion in August, up from $42.8 billion in the previous month. Analysts had predicted a more modest increase to $44.5 billion.


Short hits from the markets -- New York close
 
  Thur.

Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.140%

0.130%

-6.67%

180.00%
5-year Treasury note 

1.175%

1.120%

-9.20%

-56.25%
10-year Treasury note

2.500%

2.431%

-0.95%

-34.95%
30-year Treasury bond

3.893%

3.727%

5.30%

-16.12%
Currencies







 

 
U.S. Dollar Index

76.740

77.287

-2.78%

-1.89%
British pound

$1.6000

$1.5901

1.78%

-1.09%
(in U.S. $)











U.S. $ in pounds

£0.6250

£0.6289

-1.75%

1.10%
Euro in dollars

$1.4083

$1.3963

3.10%

-1.75%
(in U.S. $)











U.S. $ in euros

€ 0.7101

€ 0.7162

-3.01%

1.78%
U.S. $ in yen 

81.63

81.78

-2.45%

-12.22%
U.S. $ in Chinese

6.68

6.66

-0.61%

-2.18%
yuan











Canada dollar

$0.996

$0.997

2.53%

4.78%
(in U.S. $)











U.S. dollar 

$1.004

$1.003

-2.47%

-4.57%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,377.60

$1,370.50

5.19%

25.67%
(per troy ounce)











Copper

$3.8155

$3.8205

4.49%

14.01%
(per pound)











Silver

$24.4350

$23.9320

11.98%

45.06%
(per troy ounce)











Wheat 

$7.0075

$7.0275

3.97%

29.41%
(per bushel)











Corn

$5.6725

$5.6925

14.42%

36.85%
(per bushel)











Crude oil 

$82.69

$83.01

3.40%

4.20%
(per barrel)










 


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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


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