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Stocks Pare Losses, Close Modestly Higher

Dan Berman
Hot Stock Minute

Stocks pared earlier losses to close out this final trading day of the week modestly higher. On the economic front, consumer sentiment rose to its highest level in six years. The index as calculated by Thomson Reuters and the University of Michigan shows a reading of 85.1 in July up a full point from June. Still, traders seemed more focused on earnings, which for the most part were lackluster.

Amazon (AMZN) rose nearly 3% today despite a disappointing and discouraging quarterly report that showed a loss. The internet giant was two cents in the red per share when analysts had expected profits of five cents. Revenue also missed but was much closer to estimates at $15.70 billion versus $15.73 billion. Amazon says it's bottom line is being hurt by warehouse expansions to speed up delivery of goods. It has also been shelling out money to expand offerings for its video streaming service.

Starbucks (SBUX) soared over 7% and hit an all-time high on its earnings. The company beat estimates posting profits of 55-cents a share when consensus was for 53-cents. They were a dime higher than a year ago. Revenue also beat at $3.72-billion versus estimates of $372-billion. A year ago that figure was $3.30-billion. Starbucks says it is benefiting from stronger sales and lower coffee costs. The company is credited with improving its offering of food items.

Zynga (ZNGA) fell 14% on an announcement from new CEO Don Mattrick. He says the game company will no longer pursue a license for online gambling. The decision comes just two weeks after Mattrick took the reigns from company founder Mark Pincus. The announcement coincided with release of Zynga's quarterly earnings. They show the company losing a penny for the quarter when analysts were looking for losses of 4-cents. Revenue also beat by $5-million at $188-million for the period. The stock had climbed 7% yesterday on Facebook's (FB) 30% rise.

Another game company, Activision Blizzard (ATVI) soared 15% today. France's Vivendi is selling 85% of its stake in the company for $8.2-billion. Activision Blizzard is buying the bulk of the shares. Its management team is grabbing up the rest.

Expedia (EXPE) lost over 1/4 of its market capitalization today plummeting 27% on its earnings. The company posted profits of 64-cents a share excluding items when expectations were for 79-cents. Revenue also missed, but not by nearly as much at $1.21-billion when consensus had been for $1.26-billion. Expedia is pointing to increased competition for the shortcomings. It's also blaming poor performance by its discount site Hotwire.

SolarWinds (SWI) closed down 22%. The software company actually beat on earnings with 40-cents a share versus estimates of 36-cents. But revenue missed by $1-million dollars at $78-million, and the company had a disappointing outlook. Even prior to this plummet, shares of SolarWinds were down more than 15% this year.

Tempur Sealy's (TPX) performance today was like a bad dream with shares down over 11% on the company's earnings. They came in at 36-cents a share on an adjusted basis when estimates were for 40-cents. Without the adjustments the company actually lost 3-cents a share due to weaker sales, lower profit margins and charges from its acquisition of Sealy. Making matters worse, the company lowered its full-year forecast. Up until now, shares of the company were up 28% year-to-date.