Stocks opened in negative territory after disappointing data on nonfarm productivity growth, or a lack thereof, in the final quarter of 2017. The surprising productivity report put the sellers in control at the open, though the averages began slowly paring their losses before long. The averages have moved solidly into the green near noon as investors continue to weigh last night's reports from tech-heavyweights Facebook (FB) and Microsoft (MSFT) while awaiting tonight's reports from Apple (AAPL) and Amazon (AMZN). ECONOMIC EVENTS: In the U.S., initial jobless claims slid 1,000 to 230,000 in the week of January 27. Worker productivity declined 0.1% in the preliminary Q4 nonfarm productivity reading, which was significantly worse than the 1.1% improvement that was expected. Unit labor costs rose 2.0% last quarter, which was above the 0.9% increase that was expected. Markit's manufacturing Purchasing Managers' Index rose 0.4 points to 55.5 in the final reading for January. The Institute for Supply Management's manufacturing index eased 0.2 points to 59.1 in January. Construction spending rose 0.7% in December, a bit better than the 0.5% consensus growth forecast. In Asia, China's Caixin PMI came in 51.5, in-line with expectations, while Japan's PMI reading of 54.8 was up from a prior reading of 54.4. In Europe, the final Eurozone manufacturing PMI was inline with the flash reading at 59.6 for January. COMPANY NEWS: Shares of Facebook initially dropped following the company's earnings report, as its better than expected profits and revenue in the fourth quarter were overshadowed by its statement that changes made to its news feed reduced time spent on Facebook by roughly 50M hours every day in the quarter. As investors, and analysts, mulled how the changes may be reducing time spent but also increasing the quality of the service, and after executives made reassuring comments in the same vein, the stock recovered to be up about 4% near midday... Microsoft also reported better than expected sales and profits, powered by its cloud products, sending the stock about 1% higher... AT&T (T) is up 4% after reporting earnings that were boosted by the positive impact of recent U.S. tax changes. The mobile services giant also reported 4.1 million total wireless net additions for the fourth quarter, including 2.7 million in U.S... UPS (UPS) is down 6% after announcing a 2018 earnings view that was impacted by its plans for capital expenditures of between $6.5B-$7B, mostly dedicated to investments in new technology, aircraft and automated capacity. MAJOR MOVERS: Among the noteworthy gainers after reporting quarterly results were QuinStreet (QNST), Cimpress (CMPR), and eBay (EBAY), which rose a respective 37%, 19%, and 14%. Also higher was Pandora (P), which gained 7% after it announced an organizational restructuring, under which it will reduce its workforce by roughly 5%. Among the notable losers after reporting quarterly results were Resolute Forest (RFP), Tractor Supply (TSCO), and PayPal (PYPL), which fell a respective 28%, 7.5%, and 6%. Also lower was Owens & Minor (OMI), which slipped 18% after it lowered its fiscal 2017 adjusted earnings per share view, saying its fourth quarter performance was affected by increased price and margin compression, longer than expected sales cycles for the company's fee-for-service businesses, and product supply issues with certain larger manufacturers. INDEXES: Near midday, the Dow was up 130.11, or 0.5%, to 26,279.50, the Nasdaq was up 15.98, or 0.22%, to 7,427.46, and the S&P 500 was up 8.47, or 0.3%, to 2,832.28.
