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US stock market, economy and companies update (October 19, 2012)

Contributed by Trade The News

- Weakness in key earnings reports are weighing on indices this morning. McDonalds, General Electric and Microsoft are in the red this morning after disclosing troubling earnings reports. The September existing home sales numbers retreated somewhat from the two-year highs seen in the August data, although the numbers remained pretty good, with median resale prices also holding up well. EUR/USD climbed off its NY morning lows of 1.3034 to move towards the unchanged level for the session. Overall muted action was exhibited in price action from the EU Summit.

- Microsoft had a very mixed report in its Q1. Profits fell more than 20% on a y/y basis, although on an adjusted basis earnings topped expectations. Revenue was also challenged, although that mostly had to do with the deferral of some revenue in its Windows unit ahead of the big Windows 8 launch. On the bright side, the server business, including the cloud computing initiative, saw healthy growth in revenue and earnings. MSFT is down more than 2%. Flash memory powerhouse Sandisk comfortably beat expectations, as outstanding smartphone/tablet demand and some initial recovery in NAND prices. SNDK is up nearly 6%. AMD's Q3 was even worse than the company had warned earlier in the month, and its guidance for Q4 was dismal. Shares of AMD are down nearly 14%. Chipmaker Marvell Technology cut its Q3 revenue outlook ahead of earnings, warning that flagging PC and hard disk was having a big impact. Multiple analysts cut the name overnight, and shares of MRVL are down almost 14%.

- General Electric's profits were right in line, although revenue missed and the tone of executives was hesitant. Notably GE cut its revenue growth outlook for the full year to +3% from +5%. CEO Immelt said business in FY13 business would like be a lot like it was in FY12, and that no big improvement was expected in the world economy. Honeywell's profits were solid although revenue missed expectations and barely grew y/y. GE is down 2.5%, while HON is up about 2.5%. Oil services firm Baker Hughes missed both top- and bottom-line expectations thanks to the ongoing slowdown in North America activity from weak gas prices. More internationally-oriented competitor Schlumberger managed to top expectations helped by strong demand overseas. SLB is down 1%, while BHI is down nearly 6%.

- Shares of McDonalds are down nearly 4% after earnings disappointed. The company also warned that October's comps are currently trending negative, boding ill for Q4. Capital One crushed expectations in its Q3 report, as profits rose nearly 50% thanks to the positive impact of acquisitions of ING Direct and HSBC's US credit card portfolio. However executives warned that loan growth remains constrained. Shares of COF are up 6%.

***Looking Ahead***
- 11:00 (US) Fed to sell $0.75-1.10B in Notes
- 12:00 (CA) Parliamentary Budget Officer Page speaks at Roundtable
- 12:00 (DE) German Chancellor Merkel attends annual party conference of CSU Allies in Munich
- 15:00 (AR) Argentina Aug Economic Activity Index M/M: No est v 0.5% prior; Y/Y: 1.7%e v 2.7% prior
- (IT) Italy's Former PM Berlusconi may testify at Milan Trial

***Weekend***
- Spain: Basque regional elections on Sunday

***Economic Data***
(IN) India Forex Reserves w/e Oct 12th $294.9B v $295.0B prior
- (BR) Brazil Oct IBGE CPI: 0.7% v 0.6%e
- (CA) Canada Sept Consumer Price Index M/M:0.2 % v 0.3%e; Y/Y: 1.2% v 1.3%e; Consumer Price Index: 122.0 v 122.1e
- (CA) Canada Sept CPI Core M/M: 0.2% v 0.3%e; Y/Y: 1.3% v 1.4%e
- (MX) Mexico Sept Unemployment Rate: 5.0% v 5.3%e
- (BE) Belgium Sept YTD Budget Balance: -€9.2B v -€3.8B prior
- (US) Sept Existing Home Sales: 4.75M v 4.74Me