Wednesday, May 1, 2019

Markets rise on mixed economic data and Apple earnings

Dow rose 32, decliners slightly ahead of advancers & NAZ gained 25.  The MLP index dipped slightly lower in the 249s & the REIT index went up 2+ to 381.  Junk bond funds crawled higher & Treasuries went up in price.  Oil was off chump change in the 63s & gold was flat 1285.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil63.85

GC=FGold   1,282.60

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US private sector hiring grew by 275K jobs in Apr, according to the ADP National Employment report, surging past analyst expectations of 180K jobs.  “April posted an uptick in growth after the first quarter appeared to signal a moderation following a strong 2018,” Ahu Yildirmaz, VP & co-head of the ADP Research Institute, said.  “The bulk of the overall growth is with service providers, adding the strongest gain in more than two years.”  The results precede the release on Fri by the Labor Dept of the monthly jobs report, which will provide further insight into whether the nation's economy is slowing.  The US economy is expected to have added 185K jobs.  Job growth in Mar rebounded by 196K.  “The economic soft patch at the start of the year has not materially impacted hiring,” Mark Zandi, chief economist of Moody’s Analytics, said.  “April’s job gains overstate the economy’s strength, but they make the case that expansion continues on.”  Most of the jobs were created in the goods-producing & service providing-sectors.  Natural resources & mining, as well as information, were the only sectors to lose jobs.

Private sector hiring in April blows past Wall Street's expectations

Apple’s (AAPL), a Dow & NAZ stock, iPhone is an incredible moneymaking machine.  In Q1, AAPL sold $31B worth of iPhones.  At the same time, the iPhone is becoming less important to the company's total sales as the smartphone industry stalls globally.  iPhone revenue accounted for 53.5% of revenue for the company's fiscal Q2.  Last year, during the same qtr, iPhones sales were 61.4% of sales & in the most recent qtr, it accounted for 61.7% of total sales.  The smaller share of iPhone revenue indicates that AAPL is getting more skilled at selling other hardware & software products to its installed base of 900M iPhone users.  Part of the iPhone's diminished importance on AAPL's balance sheet can be attributed to sales shrinkage.  iPhone revenue was also down 17.3% year-over-year.  But part of it can be attributed to growth in other categories.  CEO Tim Cook also highlighted 2 big & growing businesses: Apple’s Services revenue, which includes subscriptions like Apple Music & iCloud, & Apple's Wearables business, which includes hardware products such as AirPods & the Apple Watch.  “It was our best quarter ever for services, with revenue reaching $11.5 billion,” Cook said.  Services revenue was up 16% from $9.19B in sales the same period last year.  AAPL has been emphasizing its services business as iPhone sales stall, & held an event in Mar to launch 4 new services, including 2 new video services & a credit card.  AAPL also had success with what it calls its “wearables” business, which includes AirPods, Apple Watch & Beats headphones.  The stock jumped up 12+ to 213.
If you would like to learn more about AAPL, click on this link:

Apple is finally moving beyond the iPhone as the smartphone industry stalls out

American manufacturers expanded in Apr at the slowest pace since Pres Trump was elected, reflecting a broad slowdown in a key segment of the economy that's acting as a headwind on US growth.  The Institute for Supply Management said its manufacturing index slipped to 52.8% last month from 55.3% in Mar.  The forecast called for the index to total 54.7%.  Readings over 50% indicate more companies are expanding instead of shrinking, but the rate of growth is the weakest since Oct 2016.  Trump was elected less than a month later.  The ISM's new-orders index slid 5.7 points to 51.7%, hurt in part by declining demand for exports.  That's the weakest reading since Aug 2016.  The employment gauge dropped 5.1 points to 52.4%, the 2nd lowest reading in 2½ years.  The ISM index is compiled from a survey of execs who order raw materials & other supplies for their companies.  The gauge tends to rise or fall in tandem with the health of the economy.  Manufacturers aren't growing as fast as they were last summer, but they are growing.  The pace of expansion is likely to remain on the milder side, however, until US & China resolve festering trade tensions & a weak global economy starts to improve.  Other parts of the economy are healthier, though, & that's keeping the economy expanding at a steady clip.  GDP increased at a 3.2% rate in Q1.

Manufacturers grow at slowest pace in April since Trump elected, ISM finds

Economic news is so-so, it could be better.  Trade talks lumber along & the results from the FOMC meeting are coming in a few hours.  The Venezuela is getting ugly fast & that has to be watched.  But AAPL is doing well & the bulls have been able to keep the popular stock averages at essentially record highs.

Dow Jones Industrials

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