Stocks sag on mixed earnings, consumer data

Consumer confidence rises, while spending gains outpace a slight uptick in incomes. Whirlpool says it will cut 5,000 jobs. Merck, AMD and Chevron beat the Street. Hewlett-Packard will keep its PC business.

By TheStreet Staff Oct 28, 2011 7:35AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Chao Deng, TheStreet

 

Updated at 1:49 p.m. ET

 

U.S. stocks were sputtering on the heels of Thursday's strong rally, as investors cast a skeptical eye on plans to resolve Europe's debt crisis and digested mixed earnings and consumer spending data.


At 1:49 p.m. ET, the Dow Jones Industrial Average ($INDU) was down 1 point at 12,207. TheS&P 500 ($INX) was falling 3 points, or 0.2%, to 1,282, and the Nasdaq ($COMPX) was losing 7.5 points, or 0.3%, at 2,731.

 

Money managers looked to cash out of some positions as the end of October -- on pace to be the best month for the markets in years -- drew near. Commodities prices also took a breather, with gold for December delivery slipping $2.40 to trade at $1745.30 an ounce. The December crude oil contract was giving up 94 cents to trade at $93.02 a barrel.

 

"It could be a follow through of the slight downside seen at the close yesterday," said Stephen Carl, equity trader at Williams Capital Group. "We may see a down day just on the heels of the recent rally."

 

Post continues below.

On Thursday, stocks surged 3% after Europe's leaders agreed on a framework for addressing the region's debt crisis. The gains helped put the Dow on track for its largest monthly point increase ever.


The rally came even as skeptics picked apart the plan, which they said lacks details that may present challenges for the eurozone. Among the key goals laid out are an expanded bailout fund, recapitalization of the region's banks and a reduction of Greece's debt burden. While noting that progress was still to be made, U.S. President Barack Obama hailed the recent pact as an "important first step."


European stocks were wavering, with London's FTSE losing 0.2% and Germany's DAX gaining 0.1%. Asian markets rose overnight as Japan's Nikkei finished 1.4% higher and Hong Kong's Hang Seng jumped 1.7%.


Consumers felt more confident in October than economists expected, giving some hope that consumer spending might help prop up economic growth in the fourth quarter. The University of Michigan’s latest index on consumer sentiment registered at 60.9, up from 59.4. Consensus forecasts had called for a fall in the index to 58.5.


However, a separate report from the Commerce Department showed that while Americans are spending more, they are doing so by saving less. Personal spending picked up by 0.6% in September, in line with expectations, while incomes edged up just 0.1%. Economists had forecast a strong rebound after incomes slipped 0.1% in the prior month.


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Investors also digested key earnings reports released ahead of the open. Companies on the S&P 500 are set to deliver 16% earnings growth for the third quarter, according to Thomson Reuters.

Pharmaceuticals giant Merck (MRK) reported Friday morning that it beat profit expectations for the third quarter, posting earnings excluding items of $2.91 billion, or 94 cents a share, compared to $2.65 billion, or 85 cents a share, in the year-ago period. Revenue was up 8% to $12 billion. Merck said it expects to see revenue growth for the year in the mid-single-digits range.

Whirlpool (WHR) significantly reduced its outlook for 2011 earnings and said it would cut 5,000 jobs to trim costs and expand its operating margins. Shares were plummeting 13.3% to $52.43 Friday.

 

Advanced Micro Devices (AMD) was surging 8.2% to $5.99 after the chipmaker swung to a profit in the third quarter, citing strong demand for its mobile processors. The semiconductor company earned $97 million, or 13 cents a share, in the latest quarter, after losing $118 million in the year-ago quarter. Analysts had expected earnings of 10 cents a share.

Chevron (CVX), the second-biggest oil company, reported third-quarter profit of $3.92 a share, beating the average analyst estimate of $3.48 a share. Sales and other operating revenues in the third quarter were $61 billion, up from $48 billion in the year-ago period, mainly due to higher prices for crude oil and refined products.

Hewlett-Packard (HPQ) was rising 2.9% to $27.76 after the company said it would keep its PC division. The technology giant had been considering a spinoff of its computer business in recent months.

The dollar index, a measure of the dollar's value against a basket of currencies, was sliding 0.05% to $75. The euro was on track for its third week of gains, last gaining 1.4% against the greenback. The benchmark 10-year Treasury was last gaining 5/32, diluting the yield to 2.384%.

 

131Comments
Oct 28, 2011 8:33AM
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Among the key goals laid out are an expanded bailout fund, recapitalization of the region's banks and a reduction of Greece's debt burden.
Recently, all the talk has been about bailouts, recapitalizing the banks, private banks taking a 50% hit on Greek debt, and leveraging the EFSF.  But there's been a key component to the whole thing that has conveniently been left out of the story in the past couple of weeks - Greek austerity plans.  It's been weeks since we've heard a peep about protests in Greece.  It's also been a couple of weeks since we've heard anything about the Grecian gov attempts to increase tax revenue, cut spending or change their pension structure.  So cash is being pumped in, and there don't seem to be many restrictions on it.  Temporary solvency has been achieved, but there aren't any plans to address the systemic problems.  What happens when they burn through this round of bailout money?  And what kind of example is this setting for the rest of the PIIGS?  The German people will not stand for this much longer.
Oct 28, 2011 10:27AM
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i currently work for a manufacturing company that makes products for other production companies.  we make devices to measure sheet material thickness.  paper-plastic-etc.  we as consumers use these products when we buy plastic wrapped food as well as cardboard boxes.  there's a huge business in making consumable products.  ~ things we end up throwing out.  "packaging material" is used on EVERYthing you buy. 

 

the sad part is so many of the products where i work are sold to overseas manufacturing plants. 

 

Personal income and spending are pretty much unchanged - yet most big corporations report increased revenue and profit.  Where does their money come from? 
Oct 28, 2011 9:02AM
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If we based our lives on day to day Headlines....We would probably never leave the house.

 

They are only Headlines folks, many change minute to minute, why do you put so much stock in something.....That may be meaningless this afternoon or tomorrow.

 

When it becomes worthwhile history,then we can refer back to it.....Unfortunately the Human animal does not learn as quick, and we will touch the stove again, to see if it's still hot.

Oct 28, 2011 9:37AM
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Read my lips said George Bush the 1st. No new taxes
Will be known as the last intelligent Republican Representative that the party mustered. His son will be known as the standard of all other Republican representatives following 
Oct 28, 2011 10:57AM
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Personal spending picked up by 0.6% in September, in line with expectations, while incomes edged up just 0.1%.
Seems like it's been quite awhile since incomes rose faster than spending.  Spending increases can't continue to outpace income increases forever.  The question remains, are we actually buying more stuff or just paying more for the same amount of stuff?
Oct 28, 2011 10:14AM
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i'm surprised profit taking hasn't kicked in yet. 
Oct 28, 2011 10:19AM
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Personal income and spending are pretty much unchanged - yet most big corporations report increased revenue and profit.  Where does their money come from? 
Oct 28, 2011 10:49AM
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Personal income and spending are pretty much unchanged - yet most big corporations report increased revenue and profit.  Where does their money come from?
The Bailout, they figured out not only how not to pay taxes they also figured out how to make the tax payers pay for their shortfalls.
Oct 28, 2011 11:54AM
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I really want one of those Government Credit Cards...

no matter how much you spend, you get more and never have to pay it back because you just raise the credit limit yourself.

Oct 28, 2011 8:50AM
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Quoted text:

Investors await data on US incomes and consumer confidence.

 

I'm sure once this info is revealed stocks will take a downward turn.

Oct 28, 2011 8:53AM
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I agree 100% BOSCO, but sometimes point references, refer to Percentage Points.

 

Either way, some sectors and/or individual equities had a very nice day yesterday...

And were way above the average 3% gain of the Indices...

 

Today,tomorrow and next week are all the 1st. day; Of the rest of our lives.  Hot

 

Oct 28, 2011 10:24AM
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Greek austerity plans. It's been weeks since we've heard a peep about protests in Greece.

The city's are shutting down. Riots, tear gas. Same ole.

Oct 28, 2011 9:48AM
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Aren't these MSN Money reporters a great team... even good news one day can be spun into bad (or not so good) news for today. Remember Wall Street LIKEs the  Dip and Rise routine look back at how many times it happens ($$$$). Just a co-winky-dink right????? Wonder why there is a rising distrust in Wall Street ... oh and don't forget Wall Street experts and reporters that graze into a crystal ball and come up with the crap they spin as to why in twenty minutes they can claim new information as to why its all happening!
Oct 28, 2011 12:32PM
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Most of the stock market employees in NY probably don't even have a car , so they really don't mind oil going up except for them to make money!
Oct 28, 2011 9:56AM
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Ah, the ebb and flow of the markets based on hope and fear and the need to create trading fees. I've burned some pretty expensive electrons in my time chasing bargains and pulling back when the reward was at risk. The fundamentals suck for continued employment in many fields. What do carburetor repairmen and buggy whip builders do today? Fix the few techno-gadgets that are too valuable to throw away if they adapted? Or their unemployment ran out and they retired. People make life changing choices daily. We as a nation have chose to spend more than we are worth. 
It is going to be real interesting to see how frantic our TBTF Federal Government will become when the last Dollar is taxed to death.
Oct 28, 2011 11:28AM
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Chevron, the second-biggest oil company, sales and other operating revenues in the third quarter were $61 billion, up from $48 billion in the year-ago period, mainly due to higher prices for crude oil and refined products
This is $13 billion more for one quarter taken from the already bad economy, keep shoving it deeper big guys!
Oct 28, 2011 9:08AM
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Give me a Gift Card to a Home Improvement store, and you've got my VOTE.

 

I'm cheap and easy......2 buck Chuck.

Oct 28, 2011 12:09PM
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STOCKS WAVER ON THURSDAYS FRAUD PUMP AND DUMP!
Oct 28, 2011 11:29AM
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Fund managers are trying for a rally to the end of the year to get the big bonuses....Nov 23rd is in between now and then, the super committee will not come up with compromises to agree on austerity for the US or raising corporate taxes so we then will see just how strong the rally is. Whirlpool cutting 5000 jobs----yea that's real good.
Oct 28, 2011 10:24AM
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HMMMM................Interesting, 3 positives and 1 negative = "in the red"!!!!! Wow that is NOT what I learned in Math!!!!!!  The English language calls it "Manipulation"
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