The Slowing Economy Won't Stop the Stock Market Today

The stock market today is up on stimulus hopes after first estimates revealed second quarter U.S. gross domestic product (GDP) increased only 1.5%.

This was slightly ahead of the 1.3% growth economists had expected, but much lower than the revised 2% growth of 2012's first quarter.

GDP was hurt by lower consumer spending, which rose 1.5% in Q2 compared to 2.4% in the first three months of the year. Jobs were another blemish in the report as the Commerce Department reported payroll gains averaged 75,000 in the second quarter, down from 226,000 in the previous three months for the lowest gains in almost two years.

The unemployment rate, which held at 8.2% in June, will be reported next Friday. The unemployment level has exceeded 8% for 41 straight months.

Consumer sentiment measured by the Thomson Reuters/ University of Michigan reading fell to its lowest level of the year. The final reading for July fell to 72.3 from 73.2 in June. The barometer for current conditions inched up to 82.7 from 81.5, while the measure of consumer expectations slipped to 65.6 from 67.8.

Facebook Inc. (Nasdaq: FB) reported its earnings yesterday after markets closed and it was not what investors were looking for.

The company announced earnings per share of 12 cents, which matched expectations. But investors were hoping for profits to crush estimates that had been drastically lowered ahead of the report.

What is more concerning is the absence of any specific plan on how Facebook will monetize mobile users, and the continued slowing growth of its user base.

Facebook stock was down more than 15% today, reaching an all-time low of $22.28.

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Chevron Corp. (NSYE: CVX) reported profits that fell nearly 7% from last year as lower oil prices hurt its upstream business, oil and gas production.

Chevron's second-quarter net income fell to $7.21 billion, or $3.66 per share, from $7.73 billion, or $3.85 per share, in the year-ago quarter.

Analysts polled by Thomson Reuters had most recently forecast earnings of $3.24 a share on revenue of $68.56 billion.

The San Ramon, CA-based company was helped by better margins for its refining business, which saw income rise 80% to $1.88 billion. Oil and gas production contributed $5.62 billion in earnings.

Chevron stated that it continues to increase investment in exploration as future demand for oil escalates.

Shares of CVX were up 0.18% today by noon.

Merck & Co. Inc. (NYSE: MRK) reported earnings that were 11% lower than the previous year, but that beat analysts' estimates due to higher sales. Merck was hurt by acquisition and restructuring costs that curbed profits.

Net income for the second quarter was $1.79 billion, or 58 cents a share, down from $2.02 billion, or 65 cents per share, a year earlier. Excluding one-time items, net income was $3.23 billion, or $1.05 per share, up from $2.95 billion, or 95 cents per share, in the year-ago quarter. That beat analysts' expectations for earnings per share of $1.01.

Sales of its leading asthma drug Singular were up 6% to $1.43 billion. This was the last quarter before the Aug. 3 deadline when Merck will face generic competition for its drug.

Merck will have to rely on its diabetes drugs Januvia and combo pill Janumet to drive profits for the current quarter. Sales for both drugs jumped about 30%, to $1.06 billion and $411 million, respectively.

The result "looks solid and we'd expect stock to outperform a bit today," wrote Mark Schoenebaum, an analyst with ISI Group in New York, told Bloomberg News. He called the company his "top pick" among pharmaceutical stocks.

Merck reiterated its earnings forecast for the year, of $3.75 to $3.85 a share. Shares of MRK were up 3.25% in the market today.

The Dow Jones today was up 101 points, or 0.79%, and the S&P 500 was down 15.12 points, or 1.11% in early trading.

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