Stocks Slip as Economy Shrinks
"The message was tamped down a bit, because although the chairman
Facebook (FB) issued its fourth-quarter earnings after the closing bell on Wednesday as the social-networking company reported earnings of 17 cents a share on $1.59 billion in revenue. Analysts expected Facebook to post profit of 15 cents a share on revenue of $1.51 billion.
Shares rose 1.5% during the regular session, but slipped in extended trading.
Bank of America Merrill Lynch reiterated its "buy" rating on Facebook on Monday, citing expected revenue acceleration and upside from mobile.Earlier Wednesday, Research In Motion (RIMM) unveiled its eagerly anticipated BlackBerry 10 technology and surprised investors by announcing that the company was changing its name to BlackBerry. Shares slid 12%. In other tech news, Amazon.com (AMZN) said fourth-quarter revenue rose 22%, but the online retailer missed Wall Street's bottom-line estimate. Shares surged 4.8%. The Bureau of Economic Analysis reported Wednesday that the advanced estimate on U.S. fourth-quarter gross domestic product showed that the economy shrank 0.1% during that period, compared with third-quarter growth of 3.1%. Economists were expecting growth of 1.1%. The ADP report on private sector employment showed a gain of 192,000 jobs in January, versus a downwardly revised 185,000 the prior month. Economists, on average, were expecting an increase of 165,000 in January. "Despite a downsizing to the December reading ... we remain optimistic that Friday's official report will leave room for upside revision," said Andrew Wilkinson, chief economic strategist at Miller Tabak. David Ader, a strategist at CRT, said that although the GDP data was disappointing, it doesn't point to a recession. Ader noted that much of the decline was attributable to weak defense spending. Government spending in that sector fell by the most since 1972. David Song, a currency analyst at DailyFX, wrote in a note that he saw encouraging numbers for the economy after looking deeper into the report, including data showing that personal consumption increased 2.2% during the fourth quarter, compared with projections of 2.1%. Disposable income was the largest since the second quarter of 2008 even as the savings rate increased to 4.7% from 3.6% during the period, Song said. The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity pointed to a decline of 8.1% for the week ended Jan. 26. Traders shrugged off the data, saying despite the week-to-week fluctuations in the report, the longer-term trend for housing remains positive.
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