Stocks cut early losses, turn mixed

August 03 02:45 2015

Stocks cut early losses and were trading mixed at midday Thursday as investors digested a batch of mixed corporate earnings and a report of slightly lower than expected but decent economic growth. The latest reading that the nation’s economy grew at a 2.3% pace in the second quarter fell short of the 2.5% estimate economists surveyed by Bloomberg expected.

The report on gross domestic product showed a rebound from the 0.6% growth in the first quarter, revised up from a previous estimate of a contraction of 0.2%. Wall Street is looking for a stronger economic rebound, as that would likely result in stronger corporate earnings. And with the stock market current valuation above its long-term average, better earnings is what it will likely take to propel the U.S. stock market higher.

At midday, the Dow Jones industrial average was flat after being down as much as 110 points.  The Dow had strung together two straight sessions of triple-digit point gains following a five session losing streak, which was its worst skid since January. The broader Standard & Poor’s 500-stock index was down 0.1%. The Nasdaq composite index turned positive and was up 0.2%.

Dow component Procter & Gamble (PG) was the leading loser after the blue-chip company gave less-than-robust forward guidance. The consumer products maker reported adjusted earnings per share of $1, topping the 95 cents forecast. But in what is becoming a trend in the second quarter earnings season, the earnings per share beat was not coupled with a beat on sales and revenue. P&G fell shy on revenue. Also hurting shares were a tepid forecast for its new fiscal year. P&G shares were down more than 3%.