Stocks on Wall Street Flat on Earnings from GE, Intel, Morgan Stanley

Nichole Harper
18 Jan, 2013
New York City

Stocks traded sideways after General Electric reported better than expected earnings and Intel highlighted rising capital spending and weakening margins. Morgan Stanley reported revenues rose 23% but earnings at various units were mixed.

[R]9:55 AM New York – Stocks traded sideways after General Electric reported better than expected earnings and Intel highlighted rising capital spending and weakening margins. Morgan Stanley reported revenues rose 23% but earnings at various units were mixed.[/R]

Markets in early trading were lackluster after Intel reported weaker than expected earnings and Morgan Stanley earnings were ahead of expectations. General Electric net was ahead of expectations.

Earnings are in focus as banks and industrial companies report earnings this week and the releases reach a peak for the next three weeks. Most analysts are looking for S&P 500 index companies’ earnings to rise between 2% and 3%, the slowest in three years.

The S&P 500 index closed at a 5-year high and is only 5.4% away from its all-time high of 1,565.15. The Dow, the narrow of index of thirty large companies, is only away from its record high of 14,164.53.

World markets surged following a rise in the indexes in New York. Market indexes in Tokyo soared 2.9% and in Mumbai gained 0.4% and in Hong Kong advanced 1.1%.

Indexes in Europe in early morning traded mixed but most indexes advanced. Indexes in London gained 0.6% and in Paris added 0.1% but in Frankfurt declined 0.2%.

Stocks in Review

General Electric Company ((GE)) increased 43 cents to $21.73 and said fourth quarter operating earnings increased 13% to $4.7 billion or 33 cents a share from a year ago quarter. Revenues in the quarter rose 4% to $39.3 billion and $147.4 billion for the year.

Industrial segment profit rose 12% in the quarter to $4.9 billion and book-to-bill ratio was a record high of $210 billion. GE Capital earnings increased 9%.

Cash generated from the operating activities increased 48% to $17.8 billion and the company ended the quarter with $77 billion of cash and cash equivalent.

Intel Corp ((INTC)) declined 6% or $1.42 to $21.23 after the chip maker reported fourth quarter revenues declined 3% to $13.5 billion and net income dropped 31% to $2.5 billion. Earnings per share in the quarter plunged 25% to 48 cents from 64 cents a year ago quarter.

Gross margin dropped 6.5 percentage points to 58% in the quarter.

For the year 2012, revenues declined 1.2% to $53.3 billion and gross margin edged down 0.4 percentage point to 62.1%. Net income declined 15% to $11 billion and earnings per share dropped 11% to $2.13.

Morgan Stanley ((MS)) increased $1.34 or 6.6% to $22.09 after the company reported net revenues for the quarter to December increased 23% to $7 billion from $5.7 billion. Income from continuing operations swung to $573 million or 28 cents a share from a loss of $1.7 billion or 58 cents a share.

For the quarter, net income including discontinued operations was 25 cents a share compared to a net loss of 15 cents a share. Compensation expense in the quarter declined to $3.6 billion from $3.8 billion a year ago.

The stocks scaled higher after the earnings release and the company said wealth management unit’s margin expanded to 17%.

For the full year 2012, Morgan Stanley reported net revenues of $26.1 billion and loss from continuing operation of 3 cents a share.

Earlier in the week, Morgan Stanley said it set aside $15.62 billion for compensation, considerably higher share of revenue 60% compared to 51% in 2011.