Wednesday, October 26, 2016

Markets fluctuate on Apple & Boeing earnings along with lower oil prices

Dow rose 30, decliners over advancers 3-2 & NAZ lost 33.  The MLP index was fractionally higher in the 339s & the REIT index gave back 4+ to the 338s  Junk bond funds were flattish & Treasuries were sold.  Oil dropped to the low 49s (see below) & gold drifted lower.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Apple, a Dow stock, fell after the world's most-valuable company reported sliding prices for its smartphones & forecast lower-than-expected profitability over the holiday period.  In its latest fiscal qtr, it sold 45.5M iPhones, with an average price of $618.72.  That was down from $670 a year earlier & below the estimate of $625.  Gross margins, a closely watched measure of profitability, will be between 38-38.5% in current qte.  That compares with analysts’ forecasts of 38.9%.  The company, which gets 2/3 of revenue from the iPhone, experienced its first annual sales decline since 2001, amid waning smartphone demand.  Global handset shipments will rise 1.6% this year, down from 10% growth in 2015, as estimated by IDC.  That's increased pressure on AAPL to find its next blockbuster product to drive growth.  Revenue in the current qtr will be $76-78B, AAPL said.  Analysts estimated $75.38B.  In its latest fiscal qtr, AAPL sold 45.5M units, topping the estimate of 45M.  While the iPhone 7 was similar to its predecessor, execs expect the device to help revive sales ahead of a more substantial upgrade in 2017.  “We are confident that we can return to growth because we see that the response from customers to the 7 and 7 Plus is really positive,” CFO Luca Maestri said.  CEO Tim Cook said the company was "thrilled with the customer response" to the new iPhones.  He also highlighted growth of Apple's Services business.  For its fiscal qtr, EPS was $1.67, down from $1.96 a year earlier.  Revenue fell 9% to $46.9B.  Analysts expected ESP of $1.66 on sales of $46.9B.  The stock dropped 2.66.  If you would like to learn more about AAPL, click on this link:   

Apple Shares Fall on Lower Phone Prices and Sliding Margin

Apple (AAPL)

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Boeing, another Dow stock,  reported Q3 earnings of $2.28B.  EPS was $3.60 & EPS, adjusted for non-recurring EPS was $3.51.  The results exceeded expectations of $2.62.  The airplane builder posted revenue of $23.9B, also topping the analyst forecast of $23.46B.  The company expects full-year EPS of $6.80-7.00, with revenue of $93.5-95.5B.  The stock soared 6.52 (5%).  If you would like to learn more about BA, click on this link:  

Boeing beats Street 3Q forecasts

Boeing (BA)

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Microsoft, another Dow stock, is expanding its hardware portfolio with a new 28" touch-screen personal computer called Surface Studio, unveiled today.  The new model weds a video monitor & processing unit, a design generally known as all-in-one.  MSFT, which also announced an update called Windows 10 Creators Update, said the new PC is intended to help users create all sorts of media content, from 3-dimensional dioramas to pictures drawn with a stylus on the screen.  "Every now and then, in pursuing our mission, we see an opportunity to create a new category of device," said Terry Myerson, exec VP of the Windows & Devices Group.  The device can be preordered today for $2,999, & will be available "in limited quantities" for the holidays.  The PC comes as computer sales slow & MSFT looks elsewhere, such as cloud computing & its Office productivity applications, for growth.  In the recently ended fiscal Q1, Windows revenue from computer makers was flat, beating the global PC market as a whole, which slid 3.9% .  The stock fell 36¢.  If you would like to learn more about MSFT, click on this link:  

Microsoft Unveils PC Geared for Media Creation

Microsoft (MSFT)

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Oil futures fell to settle at their lowest level in roughly 3 weeks.  December WTI crude fell 78¢ (1.6%) to settle at $49.18 a barrel. 

Oil Futures End At Lowest Level In 3 Weeks

The stories of AAPL & BA are far different, & BA was able to keep the Dow in the black.  Overall, earnings continue to come in disappointing.  The bigger picture is that the Dow is unable to get away from the 18K support level (shown below).  New earnings can not be expected to be better than what has already been reported.

Dow Jones Industrials

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