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Stock Market Update for 2/3/2011

February 3, 2011

Stocks Turning In Another Lackluster Performance Early On

After showing a lack of direction throughout the previous session, stocks are turning in another lackluster performance in early trading on Thursday. The major averages are once again lingering near the unchanged line after ending the previous session nearly flat.stock market update

The choppy trading comes as traders have largely shrugged off a bigger than expected drop in weekly jobless claims, as they continue to look ahead to the release of the Labor Department’s monthly employment report on Friday.

The report showed that initial jobless claims fell by 42,000 to 415,000 from the previous week’s revised figure of 457,000. Economists had been expecting jobless claims to slip to 425,000 from the 454,000 originally reported for the previous week.

Reflecting the impact of the holidays and a series of massive winter storms, the jobless claims data has shown considerable volatility in the past few weeks.

With earnings season nearing the finish line, Merck (MRK) reported adjusted fourth-quarter net income of $0.88 per share, a nickel better than expected. Sales came in at $12.09 billion, beating estimates for $11.52 billion. Meanwhile, Merck’s full-year 2011 earnings guidance missed estimates.

Visa Inc. (V) reported first-quarter net income of $1.23 per share, edging out estimates for $1.21 per share. Revenues rose to $2.23 billion from $1.96 billion, in-line with analyst projections.

Yum! Brands Inc. (YUM) posted adjusted fourth-quarter earnings of $0.63 per share, which topped expectations for $0.60 per share. Total revenues of $3.56 billion beat forecasts for $3.50 billion.

Most of the major sectors are showing only modest moves in early trading, although notable weakness is visible in the housing sector. Radian Group (RDN) is leading the sector lower after reporting a steep fourth quarter loss as a result of a tax charge.

While oil, brokerage, and health insurance stocks are also seeing some weakness, modest strength is visible among electronic storage and transportation stocks.

The major averages are currently posting modest losses, off their lows for the young session. The Dow is down 16.99 points or 0.1 percent at 12,024.98, the Nasdaq is down 1.79 points or 0.1 percent at 2,747.77 and the S&P 500 is down 1.78 points or 0.1 percent at 1,302.25.

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