Courtesy of Blain.
A morning gap up led to some sellers showing up as the extended NASDAQ needed to take a bit of a breather. The S&P 500 fell 0.41% and the NASDAQ 0.63%. There is a Federal Reserve meeting this week in between all these earning reports so we’ll see if there is any gyration Wednesday – but no action is expected until fall at the earliest in terms of raising interest rates.
Fun fact – Amazon.com founder Jeff Bezos is now richer than 3 of the 4 Walmart heirs. Bezos’s fortune jumped $4.9 billion to $40 billion making him the world’s 10th-richest person. The jump puts him on par with Wal-Mart founder Sam Walton’s daughter-in-law, Christy Walton, the richest woman in the U.S. Walton’s sons Jim and Rob are ranked 11th and 12th with $38.5 billion and $37.4 billion respectively. Alice Walton is ranked 15th with $36.7 billion.
Technically the NASDAQ actually put in a nasty reversal where it engulfed the entire prior session, first going up the previous day’s high and then closing below its low. A lot of times when you see that in a stock it tends to mark a near term high, but we’ll see if it matters to the NASDAQ itself. The S&P 500 petered out intraday almost exactly at our upper trend line.
It is worth noting the Russell 2000 also had a similar bearish outside reversal day. Again, we’ll see if this market – which has punished bears non stop for years – cares about that sort of technical indicator in the next few weeks.
The NYSE McClellan Oscillator actually went red today – this is interesting to note. It speaks (as we noted last week) of a narrowing market. A lot of large cap NASDAQ type stocks are doing well but quite a few names are struggling too.
This is a nice measurement tool from stockcharts.com showing breadth – it shows the % of stocks over the 50 day moving average. You can see it is not even at 60% even as the NASDAQ and Russell 2000 had been surging. Compare to the rally in February when it was closer to 80%. So obviously the S&P 500 itself has been lagging the other indexes and we are not getting gangbuster participation.
Biotech was the culprit for the NASDAQ as it had a rare big day to the downside.
Traders were piling into Apple (AAPL) ahead of its earning report which was released after hours. The stock is up another 1.5% in after hours as of this writing but by tomorrow that could be a different figure.
The metrics for this company are simply amazing. Outside of iPads everything is humming and the cash generation is out of this world. Considering the magnitude of these numbers it is worth devoting a section just to Apple today.
Apple posted a 33 percent jump in profit last quarter, fueled by strong demand for the iPhone and sales growth in China. The company also boosted its capital-return program by $70 billion. Net income in the quarter that ended in March was $13.6 billion, or $2.33 a share, and revenue rose 27 percent to $58 billion, the company said. IPhone sales in greater China outpaced those in the U.S. for the first time, helped by the Chinese New Year celebration, Apple said. Analysts on average had forecast second-quarter profit of $2.16 a share and sales of $56 billion.
IPhone unit sales jumped 40 percent to 61.2 million. That topped analysts’ average prediction for 58.1 million, based on data compiled by Bloomberg. Total revenue from greater China surged 71 percent to $16.8 billion. Another bright spot for Apple was Mac unit sales, which rose 10 percent to 4.56 million, as new products have breathed life into the PC line. Analysts had predicted 4.7 million Mac unit sales. IPad sales dropped 23 percent to 12.6 million, marking the fifth straight quarter of year-over-year declines. Analysts had predicted a 17 percent drop.
Cash and marketable securities increased to $193.5 billion at the end of March, Apple said. That’s driving Apple’s increase to its capital return program, which now totals $200 billion. The plan unveiled Monday includes boosting its share-buyback authorization by $50 billion to $140 billion, and increasing the company’s dividend by 11 percent. Apple has also raised the equivalent of more than $40 billion in debt in less than two years to help finance dividends and buybacks, letting it return more money to investors without incurring U.S. taxes on foreign profits.
Tesla Motors (TSLA) surged today ahead of a battery announcement later this week.
Tesla Motors shares rallied Monday ahead of Thursday’s announcement about storage batteries, with analysts at Deutsche Bank saying the electric-car maker’s new line of business “may be more significant than the market anticipates.” Tesla is set to introduce a line of home and utility-scale batteries after the market close on Thursday, its official first step into the stationary storage business. Tesla’s batteries would help power utilities to manage power demand and grid fluctuations. For homes, they would be paired with solar-power arrays.
Applied Materials (AMAT) slid 8.4 percent, the biggest drop in six years. The supplier of machines used to make computer chips scrapped its $9.39 billion takeover bid for rival Tokyo Electron Ltd. on opposition by the U.S. Department of Justice.
Key earnings reports Tuesday include BP, Bristol-Myers, Merck, Pfizer, Ford, Honda Motor, Aetna, Twitter, UPS, GoPro, Express Scripts, Western Digital, Panera, US Steel, Cummins, and Samsung Electronics.
