Stocks Mixed; Yellen, Ukraine, Data in Focus

U.S. Market
Stocks were mixed at midday as global markets eyed developments in Ukraine and comments from Fed chair Janet Yellen.

Amid high tensions in eastern Ukraine, Russian president Vladimir Putin requested that the Ukrainian government halt military action against pro-Russia separatists. That said, he also requested that the separatists postpone their May 11 referendum to secede from Ukraine. Putin also appeared to be more optimistic on the outcome of the May 25 presidential elections in Ukraine. Putin's sentiment could be a positive step to ease concerns between the two countries.

Stateside, in her testimony before Congress this morning, Yellen gave favorable remarks about U.S. economic progress, especially as the calendar year moves into warmer months. However, she was careful to point out risks to growth and noted that inflation and employment conditions still remain weak, stating short-term rates will remain low for the near term.

Meanwhile, U.S. productivity dropped 1.7% during the first quarter, while unit labor costs rose 4.2%. Each number was annualized, and each movement was more than economists had expected. These data are indicative of economic sluggishness during the recent winter months.

The Dow was 0.7% higher at midday. The S&P 500 had gained 0.3%, but the Nasdaq was off 0.8%.

Stocks on the Move
Whole Foods Market (WFM) reported second-quarter results that were below Morningstar analysts' expectations, and in its second-quarter earnings release, the firm provided a very detailed five-year outlook for store/square footage growth, sales growth, operating profit margin, EBITDA margin, earnings per share, and return on invested capital. Most notably, management see the potential for 6% annual same-store sales growth, gross margins in line with historical margins (about 35%), operating margin expanding to 7.0%, and return on invested capital averaging in the mid-teens. Shares, however, had sunk by nearly 20% following the weaker outlook.

Mondelez International's (MDLZ) nearly 3% organic sales growth in the first quarter and 140-basis-point improvement in adjusted operating margins to 12.2% were an afterthought following the headline-grabbing news that it plans to combine its coffee brands--Jacobs and Tassimo, among others, which in sum represent about $3.9 billion in annual revenue or 11% of total--with DE Master Blenders 1793 to create a leading global coffee company with $7 billion in annual sales. At the close of the deal (slated for 2015), Mondelez is to receive $5 billion after tax and will continue to hold a 49% interest in the new firm (Jacobs Douwe Egberts). Shares had jumped more than 7% by midday.

Alibaba Group's IPO filing yesterday is particularly relevant to Yahoo (YHOO) shareholders. Morningstar analysts note that they have not yet struck a formal valuation for Alibaba Group, but they believe it is important to consider both the economic opportunity for and risk to investors in Yahoo’s stock. Based on disclosure of secondary transactions and the resulting valuation of Alibaba ordinary shares in the initial F1 filing, Alibaba Group represents approximately half of Morningstar's fair value estimate for Yahoo. The analysts maintain their view that Yahoo's competitive position in the digital advertising segment is continuing to wane. Yahoo shares were down 6% at midday.

Foreign Markets
Stocks in Asia were lower Wednesday, as the Shanghai Composite was down 0.9%, the Nikkei 225 lost 2.9%, and the Hang Seng was 1.0% lower.

European stocks were mostly higher, as the Paris CAC and the DAX gained 0.4% and 0.6%. The FTSE 100 was flat.