Dow recovered 543, advancers over decliners 2-1 & NAZ shot up 249. The MLP index hovered above 280 & the REIT index crawled up 1 to the 423s. Junk bond funds were mixed & Treasuries were hit with selling which raised yields. Oil was up 1+, taking it over 70, & gold added 6 to 2755 after yesterday's sharp decline.
Dow Jones Industrials
Apple's (AAPL), a Dow stock, 2nd-largest division after the iPhone has turned into a $100B a year business that investors love. In its earnings report, the company said it reached just under $25B in services revenue, an all-time high for the category &12% growth on an annual basis. “It’s an important milestone,” CFO Luca Maestri said. “We’ve got to a run rate of $100 billion. You look back just a few years ago and the the growth has been phenomenal.” AAPL first broke out its services revenue in the Dec qtr of 2014 when it was $4.8B. The services unit has become a critical part of AAPL's appeal to investors over the past decade. Its gross margin was 74% in the Sep qtr compared to AAPL's overall margin of 46.2%. Services contains a wide range of different offerings. According to SEC filings, it includes advertising, search licensing revenue from Google (GOOGL), warranties called AppleCare, cloud subscription services such as iCloud, content subscriptions such as the company’s Apple TV+ service, & payments from Apple Pay & AppleCare. AAPL boasts to investors that its sales from Services will grow alongside its installed base. After someone buys an iPhone, they're likely to sign up for AAPL's subscriptions, use Safari to search Google, or buy an extended warranty. On a 2016 earnings call CEO Tim Cook told investors to pay attention. “I do think that the assets that we have in this area are huge, and I do think that it’s probably something that the investment community would want to and should focus more on,” Cook said. AAPL's 4th-qt results beat expectations for revenue & earnings, but net income slumped after a 1-time charge as part of a tax decision in Europe. The stock fell 2.86.
Apple’s services unit is now a $100 billion a year juggernaut after ‘phenomenal’ growth
US job growth slowed down in Oct, coming in well short of expectations, while the unemployment rate was unchanged. The Labor Dept reported that employers added 12K
jobs in Oct, well below the 113K gain that was predicted & the unemployment rate was 4.1%, in line with expectations. The
number of jobs added in the prior 2 months were both revised
downward, with job creation in Aug revised down by 81K from a gain
of 159K to 78K, while Sep was revised down by 31K from a
gain of 254K to 223K. Private sector payrolls contracted by 28K in Oct after economists projected they would rise by 90K. The manufacturing sector
saw employment decline by 46K jobs in Oct, which the Bureau of
Labor Statistics (BLS) noted was largely due to strike activity in the
transportation equipment manufacturing sector. About 33K unionized
machinists at Boeing (BA), a Dow stock, have been on strike since early Sep. The construction sector added 8K jobs below the average of 20K jobs per month in the past 12 months. Health care added 52K jobs in Oct, near its average monthly gain of 58K in the last year. The gov added 40K jobs in Oct, mostly in line with its average monthly gain of 43K over the past 12 months.
US economy added 12,000 jobs in October, well below economists' expectations
Amazon's
(AMZN) online advertising business brought in $14.3B in the 3rd
qtr, up 19% year over year, in line with estimates of
$14.3B. The tech giant revealed the financial results of its growing advertising unit as part in its latest earnings report. AMZN's overall 3rd-qtr sales were $159B, ahead of the estimate for $157B. The
online advertising business is still a fraction of the company's
overall business, but its growth over the years has made it a major competitor. The stock jumped 13.31 (7%).
Amazon’s advertising business grew 19% in the third quarter
Stocks rebounded as investors digested a big miss in the monthly jobs report & welcomed earnings from AMZN & other tech companies. Markets took in stride the disappointing headline numbers in the all-important jobs report (above) when the US economy significantly missed expectations. The gov said those numbers were weighed down by recent hurricanes & strike activity, most prominently at BA. With today' rise, Dow is down 250 this week.
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