Stocks advance in early trading Wednesday as investors cheer Cisco's upbeat quarterly results.



NEW YORK (TheStreet) -- The major U.S. stock averages opened higher Wednesday as stronger-than-expected quarterly results from networking giant Cisco(:CSCO) offered investors some distraction from downbeat domestic retail sales data.

Cisco shares were jumping more than 7% at the open after the Dow component topped Wall Street's expectations in its latest quarter on both the top and bottom lines.

The Dow Jones Industrial Average was advancing more than 12 points, or 0.1%, at 12,768. The S&P 500 was up close to 5 points, or 0.35%, at 1379. The Nasdaq was rising nearly 15 points, or 0.51%, at 2898.

"With the majority of earnings reports in (approximately 70% better than expected) and the elections complete the equity markets are searching hard for direction and the fiscal cliff is clearly the major concern of the moment and the main driver," said Mike Boyle, senior vice president, Asset Management of Advisors Asset Management . "Given this we would look for the S&P 500 to tack between 1350 and 1430 through year-end as the fiscal cliff negotiations heat up, but we fully expect the cliff to be averted and the S&P 500 to post a double digit return for 2012 and again in 2013."

President Barack Obama is scheduled to speak at the White House Wednesday and meet with dozens of corporate executives as he works towards striking a deal on the fiscal cliff with Congress.

The Census Bureau reported Wednesday that retail sales fell 0.3% in October, more than the 0.2% decline expected by economists, after increasing by an upwardly revised 1.3% in September.

Excluding motor vehicles, retail sales were unchanged; economists had forecast an increase of 0.2%.

"October's U.S. retail sales figures suggest that consumption has lost a bit of momentum ahead of the crucial holiday shopping season," said Paul Dales, senior U.S. economist at Capital Economics. "Even after excluding sales of gasoline, autos and building materials, underlying sales fell by 0.1% month over month ... compares with an average rise of 0.6% month over monthover the previous three months."

"It is hard to know how much of this is due to Hurricane Sandy (the Census Bureau said it doesn't know either) and how much may be due to a more general easing in spending growth linked to concerns over the fiscal cliff," Dales continued. "November's sales will be crucial. A bounce-back would point to a temporary Sandy-induced softening, while another soft month would suggest that the threat of a sharp fall in after-tax incomes in the new year is worrying households."

The Bureau of Labor Statistics reported that the producer price index fell 0.2% in October after advancing by 1.1% in September. Economists were expecting levels to increase 0.2%.

Excluding food and energy, the index fell 0.2% after being flat in September. Economists predicted an increase of 0.1%.

At 10 a.m., the Census Bureau is forecast to say that business inventories increased 0.5% in September after rising 0.6% in August.

At 2 p.m., the minutes from the latest two-day Fed policy meeting, which ended Oct. 24, will be released.

The FTSE 100 in London was sliding 0.52%, while the DAX in Germany was off 0.30% on Wednesday. Japan's Nikkei average settled up 0.04% and Hong Kong's Hang Seng closed higher by 1.20%.

Gold for December delivery was up $3.30 to $1,728.10 an ounce at the Comex division of the New York Mercantile Exchange, while December crude oil contracts were up 15 cents at $85.53.



The benchmark 10-year Treasury was down 7/32, lifting the yield to 1.624%. The dollar was down 0.05%, according to the U.S. dollar index.

In corporate news, Abercrombie & Fitch(:ANF) shares were soaring more than 29.5% after the retailer posted much better-than-expected third-quarter earnings of 87 cents a share and lifted its full-year outlook. The company expects full-year earnings of $2.85 to $3 a share, above Wall Street expectations of $2.48 a share amid robust U.S. sales growth and strengthening demand in overseas markets.

Analysts, on average, were expecting the company to post third-quarter earnings Wednesday of 59 cents a share.

AMD(:AMD) denied Tuesday that it's on the block following a report that the No. 2 chipmaker could be be up for sale.

Shares were falling more than 3.5%.

Staples(:SPLS) posted third-quarter revenue that missed forecasts, driven by tepid sales in Europe and Australia. The office supply chain's earnings per share came in above estimates at 46 cents on revenue of $6.35 billion; analysts expected earnings of 45 cents a share in the October-ended period on revenue of $6.45 billion.

Shares were gaining more than 3.5%.

Williams-Sonoma(:WSM) is expected by analysts Wednesday to post third-quarter earnings of 45 cents a share on revenue of $921.8 million. Shares were up 0.5%.

Mosaic (:MOS) shares were tumbling more than 3.5% after the fertilizer producer lowered its fiscal second-quarter potash and phosphates sales volume outlook, citing softer international demand.

Home Depot (:HD) shares were sliding more than 1% after Raymond James downgraded the home-improvement retailer stock to market perform from outperform due to valuation.

-- Written by Andrea Tse in New York.



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