Stocks move higher on Merkel remarks

Shares of Facebook slump as their lockup period ends. Jobless claims rise and housing starts decline, while building permits jump to a 4-year high. Wal-Mart slips on a disappointing outlook. Cisco rallies on a dividend hike.

By Melly Alazraki Aug 16, 2012 9:20AM
Updated at 12:27 p.m. ET

Stocks turned higher Thursday after mixed reports on both the housing and labor markets pointed to lackluster growth, but as comments from German Chancellor Angela Merkel appeared to back potential moves by the ECB to fight the eurozone crisis. Cisco (CSCO) soared on a dividend hike, leading the Dow stocks. Wal-Mart (WMT) fell on a disappointing third-quarter outlook, and Facebook (FB) reached record lows.

The Dow Jones Industrial Average ($INDU) was up 71 points at 13,236. The S&P 500 ($INX) was up 8 points at 1,413. The Nasdaq Composite ($COMPX) was up 24 points at 3,055.


World shares were little changed after hints that China, which is relied upon to be the global growth engine, may further loosen its monetary policy. At the same time, China warned that its trade outlook for the year is worsening, mostly because of the troubles in Europe.


US economic data
The department of Labor issued a somewhat mixed report. Revising the previous week's figure up to 364,000 from 361,000, it also said the number of Americans filing new claims for jobless benefits rose by 2,000 to a seasonally adjusted 366,000, in line with economists' forecasts.

But the four-week moving average for new claims, a better measure of labor market trends, dropped 5,500 to 363,750. That was the lowest since March and the second lowest since April 2008.

Similarly, housing data was mixed. Housing starts unexpectedly fell 1.1% in July to a seasonally adjusted annual rate of 746,000 units, well below economists' forecasts. Also, gains from the prior month were revised lower.


Meanwhile, building permits rose 6.8% in July to a 812,000-unit pace, the highest rate since August 2008. After six years of a housing market slump, recent signs pointed to the beginning of recovery that could help boost the economy.


The Philadelphia Fed's manufacturing index only increased to negative 7.1 in August from negative 12.9 in July, worse than the negative 5.0 economists were expecting, according to Briefing.com. This marks the fourth consecutive negative reading.  


The dollar strengthened against most major currencies after a strong U.S. industry output report on Wednesday. Oil remained near three-month highs. 


Stocks to watch

Cisco Systems (CSCO) shares jumped after the world's largest network equipment maker announced a 75% dividend hike as it managed to also post quarterly results that beat estimates. But the company said Europe would stay challenging in the next few quarters.


Wal-Mart Stores (WMT) shares fell despite the company's topping analyst quarterly profit estimates. The world's largest retailer, however, missed Wall Street's sales estimates and forecast full-year earnings that could fall short of analyst expectations. Wal-Mart's gains in the U.S. are slowing.


Facebook shares were slipping as the social network frees up 271.1 million of its shares, boosting by 60% the number that could be traded. Considering the concerns that have weighed on the stock since the company's poor IPO, the extra shares will likely not help increase their valuation.


Sears Holdings (SHLD) shares rose after the department store operator reported a narrower fiscal-second-quarter loss that matched expectations as the retailer's lowered costs. But sales declined more than expected as domestic same-store sales dropped 3.7% and the company had fewer full-line stores in operation.


Electronic Arts (EA) shares soared after The New York Post reported it is exploring a sale, including to private-equity giants KKR and Providence Equity Partners, as the video game maker struggles to grow its business amid competition from free online gaming sites.


Agilent Technologies (A) shares tumbled after the maker of scientific-testing equipment cut its full- year forecasts, citing slowing economic growth and delays in order deliveries from customers.

172Comments
Aug 16, 2012 9:39AM
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The US Economy is like a lap top that has a dead battery.  It functions while being plugged into the wall (debt / debased funding).  But as soon as you pull the plug, regardless of how long you left it plugged in, the lap top would surely go dead (removal of the government support above and beyond tax revenues).

How long can we keep this up?

Aug 16, 2012 9:49AM
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the government spends what it takes in and then some. 

 

a scary vote is coming up in california this fall.  the govenor has refused to get the spending in line and he wants us to vote ourselves a tax increase.  while i'm certainly against any increase, i'm worried about the nut jobs who will be swayed by "the poor teacher" commercials.  the endless line of civil servants with their paltry 80% to 90% pension plans.  oh the shame in their having to retire at age 50! 

 

with some 45% of the state being hispanic - some counties having 3 out of 5 not even having a high school diploma or GED - AND THEY CAN VOTE! - we're a petre dish of the future of usa

Aug 16, 2012 10:09AM
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There is way too much government control in this great country, and Americans better get smart and take it back......
Aug 16, 2012 9:58AM
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Many of the fiscal problems in CA stayed pretty well hidden when the economy was booming.  Economy-wise, they had a good, long run of several decades, and people flocked there in droves starting after WW2.  Seems like when something started to slip, something else was there ready to take it's place.  Aerospace and defense contractors in the 80s, Silicon Valley in the 90s, etc...  But with no boom for awhile, the terrible decisions made along the way are coming back to haunt that state.
Aug 16, 2012 10:13AM
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Do the writers at MSN.Money not know how to add?  Initial jobless claims rose by 2000?!?  Wasn't last weeks number 361,000 and this week it 366,000?  Right?  Is it just me or did they revise last weeks number up again without reporting it?  It is easier to tell the truth than to lie.  It's easier to remember the truth!

Aug 16, 2012 10:54AM
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WHAT'S WRONG WITH THIS HEADLINE????

 

Stocks higher after US data...........................
Jobless claims rise.........................................
Housing starts decline unexpectedly...........
Wal-Mart falls on a disappointing outlook...
 
EVERYTHING IS WRONG, THAT'S WHAT.

 

Aug 16, 2012 10:37AM
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ur kiddin?? noooooooooo way!!  jobless claims rise??!!! but...butt. buttt..but...butt the private sector is doin' so well!! but..butt

but...butt, osama, I mean obama said his plans are workin!! but...butt...butt.but Romney's bank accounts, but butt he'll keep blacks in chains.. butt, butt, homes sales in decline, no they're up, I think, ummm, butt butt how...but but sooooooooooooooooooo many jobs created..but, but, but!!! cayman bank accounts, but but but

 

oh I'm sorry was I short circuting again? yea sometimes I get that way when I read the same thing over and over again, the markets' flat, or it's down or its mixed then it rally's!! only to loose all it's gaines and well it's up then it's down then... well u get the idea

 

meanwhile back in REALITYLAND, tell me again how obama's gonna win re election again? ha!! oh before I go was passing my gas station again premium was 4.23 per gallon, passed by it again 'bout 2hrs later, it went up to 4.25, tell me again idiot libs how obama's gonna get re elected cuz I luv to laugh out loud, make me feel goooooooooooood!! oh wait a minute, what's this on TV now?? a dating site called blackpeoplemeet.com hmmmm, can u imagine if there was a whitepeoplemeet.com? later

Aug 16, 2012 11:29AM
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The republicans could easily defeat the current president if they had a candidate who said 'HOW' he/she was going to fix the problems instead of the American citizens having to just trust their statements that they are going to fix the problems.

Rarely has their been an election where the true issues were avoided and the 'fluff' of the candidates was the only thing in the headlines.  Not only can't I trust what the candidates say, but I can't trust the media to report anything factually.  Ads for both candidates put forth lies about the other because media knows if they repeat anything often enough, it will be believed, even when the truth actually comes out - months later.
Aug 16, 2012 10:05AM
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So let's interpret today's data.  Housing starts are down but permits are up so there is room for optimism.  Sure.  Permits are not clear indicators of future activity as permits can stay inactive for months or expire unused because of lack demand.  Are we to be happy that claims went up because they are in line with estimates? And let's test the reliability of the statistics on the published unemployment rate.  If illegal immigrants have now been registering and they are looking for work, shouldn't the unemployment rate spike upward?  Don't think we'll see that, but we will see wack jobs like Ricardo Alonso (who probably just registered in the U.S. now) discuss how Romney's plans for Medicare will hurt the general economy.  You just can't make ths stuff up.

Aug 16, 2012 11:32AM
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" The Philadelphia Fed's manufacturing index only increased to negative 7.1 in August from negative 12.9 in July, worse than the negative 5.0 economists were expecting, according to Briefing.com. This marks the fourth consecutive negative reading.  "

And "manufacturing is fueling the recovery".

Remember that comment? 
Aug 16, 2012 11:09AM
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SteveG, the biggest problem for California is that they always vote for spending more, but they don't want to pay for it, just like Republicans. Californians voted for the Three Strikes Law that keeps the career criminals off the streets and has lowered the crime rates, but now the prisons are over crowded and the cost off medical for all these life long drug addicts is horribly high, the people want to keep them incarcerated ,but they don't want to pay for it. Californians voted for 23 students per class room so children would get a better education, this skyrocketed the cost of education, but no tax increases were implemented to pay for it and just recently during the worst recession of our life time, Californians voted for a Bullet Train that will cost about $30 billion to complete. Every body wants the good stuff government can do for them, but they want it all for free. Reality is a little different.
Aug 16, 2012 10:33AM
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Housing starts decline unexpectedley ! Go figure !  20 million homes in the shadow inventory being held by the Criminal banking Cartel. Another 12 million homes in some stage of foreclosure. Yep housing is starting to pick-up in 2012 !
Aug 16, 2012 11:18AM
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 God, the Shorts must have made a fortune on Facebook!
Aug 16, 2012 10:13AM
Aug 16, 2012 12:16PM
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So building permits are up? Could it be from all the insurance claims due to floods, fires, tornados and other natural disasters? Nothing but fluff.
Aug 16, 2012 12:13PM
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What's with the skyrocketing T bills.  looks like the storm is clearing and everyone is coming out from their safe haven. Imagine getting STUCK with a 1.35% 10 yr. T bill when everybody else is getting new ones at 3% soon. Or more. What goes down must eventually go back up. Dump now or eat it for 10 years
Aug 16, 2012 10:47AM
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Well - we knew the Job numbers would be revised.
Anyway - the housing is "picking up", you can pick up a house cheap.
Aug 16, 2012 9:56AM
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You would think, skeeter..... but here we are, livin in a make believe, debt driven world.

It's like a real life version of the Matrix.

Aug 16, 2012 11:27AM
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Today that bastion of objectivity, the Institute for Policy Studies publishes a report that states that the 26 largest companies paid their CEOs more than they did in income taxes, while ignoring the CEOs paid income tax at a 35% plus state rate on their pay and much of that pay was in stock options and restricted stock, so they paid cash taxes on largely paper, not cash income.  They also ignore that the numbers are skewed by 100% fixed asset addition (bonus) depreciation available for 2011 which was supposed to energize the economy (not).  The institute study does not consider the higher taxes the corporations must pay in future years.  The study does not even have the intellectual depth of a high school term paper.  It also makes a case for government regulations and the inevitable loophole, in this case granted by democrats.  IRC Code Section generally disallowed executive compensation at the top 5 level other than CFOsin excess of $1 million cash and non-shareholder approved, but allowed shareholder approved stock plans, so stock compensation plans developed and the stock market took off as CEOs pushed prices and their compensation plan.  And the government is now adding to the compensation packages by printing money to elevate the stock market.  Again, you can't make this stuff up.

Aug 16, 2012 9:35AM
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