Stocks Mostly Higher; Earnings, Data, Ukraine in Focus

U.S. Market
Stocks pared early losses this morning as investors considered earnings, data and escalating tensions in the Ukraine.

Initial unemployment claims rose by a larger-than-excepted 24,000 last week to 329,000. The less volatile four-week moving average came in at 316,750 claims, a level consistent with continued job growth.

Durable goods orders rose 2.6% in March from February levels. The reading was above the 2% gain expected by economists. Excluding aircraft orders, which can swing widely from month to month, orders were up 2% in the month.

At midday the Dow, S&P 500 and Nasdaq were up 0.1%, 0.3% and 0.6% respectively.

Stocks on the Move
Apple (AAPL) reported strong fiscal second-quarter earnings that exceeded expectations. The outperformance was driven primarily by solid iPhone unit sales in both developed markets and in China, the latter via the firm's recent partnership with China Mobile (CHL). Apple's revenue was $45.6 billion, above the firm's forecast of $42 billion to $44 billion as disclosed in January. IPhone unit sales of 43.7 million were the clear bright spot and well above expectations. Not only is the firm's launch with China Mobile faring well, but Apple believes it gained market share in developed markets like the United States and United Kingdom, as well as other emerging markets. Due to strong iPhone sales, gross margins were 39.3%, well above Apple's prior forecast of 37%-38%. Apple also bought back a whopping $18 billion worth of stock during the reporting period, and is authorized to buy back another $44 billion by the end of calendar-year 2015. Shares soared 8% on the news.

Verizon (VZ) appears to have reacted late to consumers’ shifting preference for lower service pricing in exchange for smaller phone subsidies. The firm reported the addition of 539,000 net new postpaid customers during the quarter, but record tablet sales padded this figure. By our calculation, the firm lost 87,000 phone customers, a stark contrast to the firm’s recent share gains. Despite the relatively weak customer growth during the quarter, Verizon’s wireless business continues to post stellar financial results. Wireless-services revenue increased 7.5% year over year, and wireless EBITDA hit a record 52.1% of services revenue. Shares were down 2.6% at midday.

Shares of Caterpillar (CAT) were up 2% after the firm reported quarterly results. The firms’ construction and engines segments enjoyed a solid quarter (revenue up 20% and 7%, respectively), while the mining business was again a substantial drag (down 37%)—overall revenue was flat year over year. While this would have offered a negative profitability mix (given mining’s loftier historical margins) in the past, improved cost control and volume absorption in both construction and engines more than offset this issue; nonfinancial operating margins climbed to about 10% from 8% a year ago.

Advertising dollars continue racing toward Facebook (FB), as shown by the company's strong quarterly results. Total company revenue reached $2.5 billion, growing 72% versus the prior year, while operating margins held firm at more than 40%. Even more notably, mobile ad revenue came in at $1.3 billion, reaching 59% of the $2.26 billion advertising segment for the quarter. Clearly, Facebook's products are well-suited for a mobile environment. Overall, users grew to 1.27 billion, while mobile users exceeded 1 billion for the first time. When advertisers need to reach a mobile user, we believe Facebook is one of the most effective platforms available today. Shares were up less than 2% at midday.

Foreign Markets
European markets were mostly higher today. In late trading the FTSE 100 and Paris CAC were up 0.4% and 0.6% respectively while Germany’s DAX was flat.

Asian shares were mixed. The Shanghai Composite was off 0.5%, the Nikkei 225 was down 1.0% while the Hang Seng gained 0.2%.