Stocks Higher After Earnings, Housing Data

U.S. Market
Stocks were mostly higher this morning as investors looked past the first case of Ebola in New York City and focused on earnings and data.

New home sales rose 0.2% in September from August levels to a seasonally adjusted annual rate of 467,000. The previous three months sales numbers were revised lower. Sales in the first nine months of 2014 are up 1.7% from the same period last year.

At midday the Dow, S&P 500 and Nasdaq were up 0.6%, 0.5% and 0.4% respectively.

Stocks on the Move
Shares of Amazon (AMZN) fell over 7% after the firm reported third-quarter results. Although were by and large disappointing, we found a few reasons for optimism in Prime memberships, AWS trends, and Fulfillment by Amazon. However, a $170 million charge tied to the Fire Phone--an 80-basis-point negative impact on gross margins, which came in at 28.9% versus 27.7% a year ago--and accelerating operating losses internationally underscore the importance of Amazon being more selective with its investments going forward. Breaking down the sales results in closer detail, electronics and other general merchandise category sales were stronger than expected, up 26%, lending additional support to the strength of Amazon's network effect. However, media category sales were a disappointment, growing just 4% globally compared with 13% in the second quarter.

Microsoft (MSFT) reported first-quarter results showed continued solid performance in its commercial business. Revenue grew 25% from last year to $23.2 billion as the phone business added $2.6 billion. Excluding phone, revenue growth would still have been an impressive 11% year over year, driven by strength in Xbox and the cloud businesses. Windows OEM revenue declined 2% as the PC replacement cycle has largely run its course. Consumers and enterprises are transitioning to Office 365, which has weighed on Office revenue in both businesses, but the company saw gains in subscription revenue and adoption of premium stock-keeping units. Not surprisingly, profitability was weaker this quarter, as the inclusion of the phone business and its associated restructuring weighed on margins. Gross margin of 55.4% was below last year's 67.9% and operating margin of 31.5% was below last year's 39.4%. Shares were up 1.5% at midday.

Procter & Gamble (PG) said this morning it plans to spin off its Duracell battery business into a standalone company. The firm also reported adjusted third-quarter earnings per shares of $1.07, which was in line with analyst expectations. Shares rose 3% at midday.

Foreign Markets
European markets were lower on the day as investors worried about the results of a banks stress test due Sunday. In late trading, the FTSE 100, Paris CAC and Germany’s DAX ere each down 0.5%.

Asian shares were mixed. The Shanghai Composite was unchanged, the Hang Seng was down 0.1% while the Nikkei 225 rose 1.0% on the day.