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Stocks Close Higher Despite Earnings Disappointments; Facebook Approaches IPO Price

Dan Berman
Hot Stock Minute

Stocks moved slightly higher amid disappointing earnings reports. The Dow and S&P 500 were fractionally higher, while the Nasdaq rose 0.5%. Blue chips including Dow components Pfizer (PFE) and Merck (MRK) beat estimates for earnings, but missed on revenues for the quarter.

Barclays (BCS) fell 7% after announcing plans to issue nearly $12 billion in new stock and bonds. The move is meant to get regulators off the bank's back who have been complaining of a capital shortfall. Barclays also released its quarterly report today. It missed on estimates and lost money for the period. Still, on a pretax basis, profits for the first half of the year were almost double what they were for the same period one year ago.

Coach (COH) dropped over 8% after the luxury retailer reported quarterly results. The company earned 78-cents a share when estimates were for 89-cents. Revenue was also slightly lower than expectations of $1.24-billion, amounting to $1.22-billion instead. Coach says it had an unexpected drop of about 1.7% in business for North America. It appears the brand is ceding market share to rivals Michael Kors and Kate Spade. Adding to concerns, the company announced the departure of two key executives.

Herbalife (HLF) pared strong gains to end the day lower by 0.8%. The stock, which has been the subject of a battle between billionaires Bill Ackman and Carl Icahn beat estimates when it reported quarterly earnings after yesterday's closing bell. Profits were $1.34 a share when expectations were for $1.18. Revenue also topped predictions of $1.16-billion coming in at $1.22-billion. The supplement maker is also upping its outlook, calling for growth in the current quarter of at least 16.5% when analysts were calling for 13%. Prior to today, shares of Herbalife were already up 88% this year, making Icahn the winner so far in his prediction as to the company's future. Ackman maintains Herbalife is simply a pyramid scheme.

Meanwhile, Facebook (FB) gained another 6% putting shares within striking distance from its IPO price of $38. The rise comes on continued momentum from the company's earnings report. The stock has seen a significant uptick in volume. Yesterday almost 122-million shares changing hands, far more than for any other stock.