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Stocks Rise on Strong Earnings, Economic Data; Amazon, Microsoft and Zynga Soar

Dan Berman
Hot Stock Minute

Stocks ended the day higher and the Dow and S&P 500 logged three straight weeks of gains. Durable goods orders rose more than expected in September. The Commerce Department says new orders climbed 3.7% for the month. The consensus had been for a gain of 2.5%. Back in August, durable goods orders rose by a scant 0.1%. In a separate report, the Commerce Department said wholesale inventories rose 0.5% in August, which was their biggest increase since January. Consumer sentiment slid to to 73.2 in October according to a Thomson Reuters/University of Michigan survey. That's its lowest level since December 2012. Expectations had been for a reading of 75.0.

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Procter and Gamble (PG) drifted 0.7% lower despite an earnings match. The company posted profits of $1.05 a share in line with the consensus on sales of $21.21-billion. Estimates had been for revenues of $21.044-billion. Procter & Gamble says it is seeing success with a turnaround engineered by CEO A.G. Lafley. He returned to the company in May. To that end, P&G is sticking with its annual forecast. The company previously said it expects 5% to 7% growth in earnings excluding restructuring charges.

UPS (UPS) moved 1.2% higher on its earnings. The shipper beat estimates by a penny, posting profits of $1.16 a share. Revenue, however, came up slightly short at $13.52-billion versus $13.60-billion. The company cited strength in its domestic ground business. Looking ahead to the holiday shopping season, the company is optimistic about business from online gift purchases.

Amazon (AMZN) and Microsoft (MSFT) both surged on their earnings, which came out after yesterday's closing bell. The climb, which topped more than 9% puts Amazon at an all-time high. The company reported adjusted losses of 9-cents a share for the quarter. That's exactly what was expected. Investors seem to be ignoring the fact that the company issued guidance for the current quarter that was below consensus. Perhaps because revenue for the period just ended beat expectations at $17.09-billion versus $16.77-billion.

As for Microsoft, shares rose 6% as the software giant had a healthy beat for the period with earnings of 62-cents a share, 8-cents above estimates. Revenues also beat expectations at $18.53-billion versus $17.79-billion. Shares of Microsoft climbed as much as 7% in intraday trading, adding to prior gains of 22% this year.

Zynga (ZNGA) shot up 5.5% on a narrower loss than expected. The game-maker lost 2-cents for the quarter, but it was expected to lose 4-cents, and revenue topped estimates at $152-million versus a consensus figure of $143-million. Revenue was actually down 36% from a year ago. However, Zynga said it expects to be profitable in the coming year.

Callaway Golf (ELY) climbed nearly 20% after the golf company reported adjusted losses of 18-cents, but analysts expected a dime worse than that. Revenue also topped the consensus at $178-million versus $152.6-million. Callaway says it benefited from cost-cutting as well as a licensing agreement for clothing and footwear. The company also upped its forecast.

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