Morning Update

Earnings Mixed and Jobless Claims Keep 600 Streak Alive

Stocks are higher in early action as traders digest a plethora of earnings reports, which yielded better-than-expected results from Apple but worse-than-expected results from United Parcel Service. Elsewhere, eBay reported that its bottomline was better than expected and issued guidance that matched analysts' forecasts. The early momentum remained even after weekly initial jobless claims rose to remain above the 600,000 mark for the twelfth-consecutive week. Treasuries are nearly unchanged after overcoming modest losses following the labor data, and ahead of a key reading on housing. Overseas, markets are mostly higher.

As of 8:46 a.m. ET, the June S&P 500 Index Globex futures contract is 4 points above fair value, the Nasdaq 100 Index is 10 points above fair value, and the DJIA is 19 points above fair value. Crude oil is up $0.65 at $49.50 per barrel, and gold is up $0.70 at $893.20 per ounce.

Apple Inc. (AAPL $122) reported fiscal 2Q EPS of $1.33, well above the Reuters estimate of $1.09, as revenues came in at $8.2 billion, also beating the Street's forecast. The company sold 2.22 million Mac computers, 11.01 million iPods, and 3.79 million iPhones for the quarter. AAPL, which typically offers conservative guidance, said it sees 3Q EPS between $0.95-1.00 and sales between $7.7-7.9 billion. Analysts expected the company to report EPS of $1.12 and sales of $8.3 billion for 3Q. Shares are higher.

United Parcel Service (UPS $55 ¹) reported adjusted 1Q EPS of $0.52, falling short of the Street's forecast of $0.56, as revenues came in at $10.9 billion, also below analysts' expectations. The company's CFO said "economic indicators tell us recovery in US might begin late this year, but more likely not until 2010." UPS said it is scaling back 2009 capital spending and issued 2Q EPS guidance that came in below analyst estimates. Shares are lower.

Ebay (EBAY $122) reported 1Q EPS ex-items of $0.39, five cents above the Reuters estimate, as revenues came in at $2 billion, also above the Street's forecast. The online auction site issued 2Q guidance that was in line with analysts' estimates.

Jobless claims rise, housing data on deck

Weekly initial jobless claims increased by 27,000 to 640,000, versus last week's figure that was upwardly revised by 3,000 to 613,000. The increase was in line with the Bloomberg consensus. The four-week moving average dropped by 4,250 to 646,750, and continuing claims jumped by 93,000 to 6,137,000, versus the forecast of 6,120,000. The report marks the twelfth- straight week of claims above 600,000. Treasuries overcame early losses and are near the unchanged mark after the report.

Later on today's economic calendar, existing home sales for March will be reported and are expected to have fallen 1.5% month-over-month (m/m) to an annual rate of 4.65 million units, after rising 5.1% in February to 4.72 million units. Post-Lehman, sales have been dominated by the rapidly falling prices afforded by foreclosures, which have accounted for 40-45% of transactions on average.

Europe slightly higher as earnings take center stage

Stocks in Europe are modestly in the green in afternoon action as traders sift through a mixed bag of key earnings reports. Highlighting the earnings reports across the pond, Swiss banking firm Credit Suisse (CS $33) is higher after it reported 1Q profits that exceeded analysts' estimates. CS posted net income of 2 billion Swiss francs ($1.7 billion), which was twice the median estimate according to Bloomberg news. The company benefited from improved trading revenue and the firm's CEO said he is optimistic about the bank's prospects. The results from CS are helping offset some negative reports from the world's largest maker of paints, Akzo (AKZOY $43), and the world's largest maker of computer mice, Logitech (LOGI $12), which both reported unexpected losses.

Asian stocks advance on beer maker M&A

Stocks in Asia were higher, led by optimism about the recovery in the global economy, courtesy of some M&A activity in Japan and Australia. Japanese beverage firm Kirin (KNBWY $11) made a bid for Australia's second-largest brewer, Lion Nathan (LNNTF $5), for an undisclosed amount to buy the 54% of the Aussie brewer that Kirin does not already own. Shares of Kirin gained ground and Lion Nathan was halted. The equity front accounted for the majority of the sentiment as shares of Samsung (SSNLF $626) gained ground after it said it aims to sell 5 million notebook computers this year, from 2 million units last year, and Pioneer (PNCOF $3) surged after Honda (HMC $28) said it was considering an investment in the car audio and navigation firm. Honda finished higher, finding additional support by an upgrade by Goldman Sachs, which also upgraded Toyota (TM $78), helping it gain ground despite reporting its third-straight quarterly drop in sales. Japan's Nikkei 225 Index rose 1.4%, Australia's S&P/ASX 200 Index advanced 2%, and Hong Kong's Hang Seng Index rose 2.3%, to lead the advance.