Apple's earnings miss may hit stocks
The Dow falls 104 in its third straight day of triple-digit losses as earnings season continues to disapppoint. Apple earnings miss Street estimates. AT&T sees lower iPhone sales. UPS says international business is softening.
Stocks were lower for the third straight day as United Parcel Service (UPS) cut its guidance for the year because of international weakness and AT&T (T) saw slower sales of Apple (AAPL) iPhones from a year ago.
Wednesday's market is likely to be pressured after Apple itself missed Street estimates on earnings and revenue for the fiscal third quarter after today's close. Apple shares were off $31.42, or 5.2%, to $569.49 in after-hours trading. The stock was off $2.91 to $600.92 in regular trading. Futures trading suggests a lower open.
The Dow Jones industrials ($INDU) suffered their third straight loss of more than 100 points, the first time that's happened since early September. But the market did rebound, with losses cut about in half, after a Wall Street Journal report that the Federal Reserve might act at its next meeting in September to boost the economy and spur employment.
Apple was just one of a number of earnings disappointments. Netflix (NFLX) beat Street estimates, but subscriber growth wasn't as great as expected, and shares were off $11.17, or 13.9%, to $69.22. Buffalo Wild Wings (BWLD) earnings also disappointed, and shares slumped $9.45, or 12% to $69.45 after hours.
The Dow closed down 104 points to 12,617; the blue chips had fallen as many as 200 points before bargain-hunting based on the Fed news set in. The Standard & Poor's 500 Index ($INX) was off 12 points to 1,338. The Nasdaq Composite Index ($COMPX) had dropped 27 points to 2,863, and the Nasdaq-100 Index ($NDX) had fallen 22 points to 2,567.
Article continues below.Apple earned $9.32 a share in the third quarter, up 19.6% from a year and a good gain by any company not named Apple. The Street was looking for $10.36. Revenue was up 22.5% to $35 billion, again missing a Wall Street consensus estimate of $37.18 billion.
The company projected earnings of $7.65 a share and revenue of $34 billion for the fourth quarter, also below estimates. It also declared its first cash dividend, $2.65 a share, payable Aug. 16 to shareholders of record on Aug. 13.
During the quarter, the company sold 26 million iPhones, its biggest moneymaker; 17 million iPad devices; 4 million Macintosh computers and 6.8 million iPod music players.
The iPhone sales were a particular disappointment to investors. Unit sales were down 25.7% from the second quarter, mostly because many users are awaiting the iPhone 5, due in the fall.
IPad unit sales were up 84.3% from a year ago.
Apple suppliers -- except Panera hit by miss; Panera Bread jumps
Apple's miss hit supplier stocks as well.
Qualcomm (QCOM) shares were off $1.03, or 1.8%, to $55.75 after falling 53 cents to $56.79. Omnivision Technologies (OVTI) fell 58 cents, or 4.8%, to $11.50. Cirrus Logic (CRUS) fell $1.58, or 5.9%, to $25. Skyworks (SWKS) slipped 50 cents, 1.9%, to $26.07. Triquint Semiconductor (TQNT) fell 11 cents, or 2.4%, to $4.75. Avago Technologies (AVGO) was off $1.08, or 3.2%, to $34.18.
An exception was Broadcom (BRCM). Its second-quarter earnings of 72 cents beat Street estimates by 5 cents. Revenue of $1.97 billion was up 10% from a year ago and beat the Street estimate by $20 million. The company also offered decent third-quarter guidance. Shares were up 77 cents to $31.54 after falling 21 to $30.77 in regular trading.
Separately, Panera Bread (PNRA) shares were up 5.9% after hours to $150.21 from a regular close of $141.91. Earnings of $1.50 a share beat estimates by 7 cents. Revenue of $531 million was up 18% from a year ago. The company expects to earn $1.16 to $1.17 a share in the third quarter, up 20%to 22% from a year ago.
|Energy prices -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|Crude oil (-CL)||$88.50||$88.14||4.17%||-10.45%|
|Heating oil (-HO)||$2.8263||$2.8206||4.30%||-3.02%|
|Natural gas (-NG)||$3.1870||$3.1170||12.85%||6.62%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.7258||$2.7638||3.57%||2.57%|
|(per gallon; AAA)|
The market takes back from shareholders
The Dow has fallen about 2.5% in the last three days, with the S&P 500 off 2.8% and the Nasdaq off 3.5%. The averages had seen three days of gains before the slump erupted on Friday, with the Dow and S&P 500 up 1.7% over those three days and the Nasdaq up 2.4%.
The Dow is off 5% since peaking in May, with the S&P 500 down 5.7% since its April peak and the Nasdaq down 8.3% since its 2012 peak on March 26. The Dow is still up 3.3% for the year, with the S&P 500 up 6.4% and the Nasdaq up 9.9%.
The darkening earnings picture came as European stocks weakened again after Moody's Investors Service changed its outlook to negative for Germany, the Netherlands and Luxembourg as the European debt crisis starts to weigh on their economies. Crude oil (-CL) was up slightly; gold was lower. The yield on the 10-year Treasury yield fell below 1.4% for the first time ever.
If you wanted some good news, you got a little from China. The HSBC/Markit.com purchasing managers index of manufacturing rose to 49.5 this month, up from 48 in June and the highest level since February. The only problem with the measure is that a reading below 50 suggests contraction is ongoing.
Earnings due Wednesday include results from Boeing (BA) Caterpillar (CAT), Ford Motor (F) and Whole Foods Market (WFM). The government will report on new-home sales. Britain will report on economic growth.
UPS adds to a disappointing earnings season
So far, the second-quarter earnings season has been a disappointment. Revenue weakness has been among the biggest issues, especially for companies that do large amounts of business in Europe and have to translate that revenue back into dollars. The dollar has risen about 15% against the euro over the past 12 months.
The UPS warning was worrisome because UPS and rival FedEx (FDX) are seen as bellwethers for the overall economy.
UPS projected the U.S. economy will expand 1% over the rest of the year, in large part because of the uncertainty created by the November election and the lack of progress in solving the fiscal cliff dilemma, CEO Scott Davis said in an analyst call. That's where Bush-era tax cuts expire and heavy federal spending cuts kick in.
In addition, premium-product growth will slow as customers choose cheaper shipping options, Chief Financial Officer Kurt Kuehn said on a call with analysts and investors.
In addition, weakness in Asia and Europe is dampening business, and the strong dollar is dampening reported revenue growth, UPS said.
Shares were down $3.61 to $74.34. The decline was among the 10 worst for S&P 500 stocks. FedEx was off $1.59 to $87.67.
AT&T shares were off 75 cents to $34.63. The good news was that profit beat analyst estimates. The bad news was those lower iPhone sales as iPhone fans wait for the new model to hit the market this fall.
Verizon Communications (VZ) shares were off 58 cents to $43.77.
Cisco slumps, JPMorgan settles; Under Armour soars
Cisco Systems (CSCO) shares were off 95 cents to $15.12, and Juniper Networks (JNPR) were off 41 cents to $14.82 as investors weigh the impact of VMware's (VMW) purchase of Nicira.
Nicira has minimal sales right now, but its business model centers on eliminating proprietary Ethernet switches from the likes of Cisco and Juniper and replacing them with commodity gear managed by Nicira's software. Cisco is working on a similar solution, but its main priority still remains selling its proprietary Nexus and Catalyst switches.
JPMorgan Chase (JPM) shares were up 29 cents to $34.73. The banking giant settled for $100 million a class-action suit accusing it of boosting minimum credit card payments as a way to generate higher fees. The suit stems from the bank -- at the height of the financial crisis -- jacking the minimum payment for thousands from 2% of the balance to 5%.
Increased athletic-shoe sales boosted earnings at Under Armor (UA), sending its shares sharply higher. The company said today it earned $7 million in the second quarter, up 17% from $6 million during the same period last year.
The company also expects 2012 revenue to hit $1.8 billion to $1.82 billion, up slightly from prior guidance and up 22% to 24% from a year ago.
Shares were up $4.41 to $52.79.
Oil moves higher; corn and wheat fall
Crude oil settled up 39 cents to $88.50 a barrel. Brent crude was up 32 cents to $103.58.
Gold settled down $1.20 to $1,576.20 an ounce. Silver (-SI) fell 23.1 cents to $26.811 an ounce, and copper (-HG) 2.7 cents to $3.353 a pound.
Despite the drought, corn (-ZC) and wheat (-ZW) prices fell 7.25 cents to $7.7825 a bushel and 34 cents to $8.7875 a bushel, respectively. Bloomberg News said prices fell on speculation that mounting European economic woes will erode commodity demand, and rain forecast in the U.S. this week may boost crops.
Interest rates were lower, with the 10-year Treasury yield falling to 1.404% from 1.435% on Monday. The yield had briefly broken below 1.4% for the first time ever. The decline follows an auction of 2-year Treasurys that produced a record low yield of 0.22%.
The dollar was higher against the euro.
|Short hits from the markets -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0900%||0.090%||12.50%||800.00%|
|5-year Treasury note||0.551%||0.562%||-24.42%||-33.61%|
|10-year Treasury note||1.404%||1.435%||-15.37%||-24.96%|
|30-year Treasury bond||2.469%||2.515%||-10.64%||-14.54%|
|U.S. Dollar Index||84.145||82.980||2.93%||4.50%|
|(in U.S. $)|
|U.S. $ in pounds||£0.645||£0.645||1.29%||0.22%|
|Euro in dollars||$1.21||$1.21||-4.45%||-6.91%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.829||€ 0.825||4.66%||7.42%|
|U.S. $ in yen||78.37||78.34||-1.72%||1.65%|
|U.S. $ in Chinese||6.41||6.38||0.56%||1.29%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$88.50||$88.14||4.17%||-10.45%|
I have to wonder who really is Presidential material? I just don't think anybody
is capable of managing this country in the political climate we are in now.
We need to get politics out of the equation before anything can get done. I don't care
who the President is.
ENDEAVOR: " A vote for Romney is a wasted vote."
So – what is a vote for the other guy?
Real simple why US is declining... our headstart that we had after WWII has disappeared after Europe, Japan and Russia rebuilt, and after China, India and Brazil actually STARTED building up. World oil production has stagnated for about a decade and our 1/4 share of world resources will decline given our 1/23 share of the world population as the rest of the population catches up.
The reason the middle class is declining is they have to share the smaller American "slice of pie" with the American elite who are not only unwilling to share in the decline--but helped speed it up by sending manufacturing jobs to China and technology jobs to India. Eventually, look for the rats that chewed a whole in the bottom of the ship to desert the sinking ship. Example of one "rat": Obama's bosom buddy "job czar" Jeffrey Immelt of GE.
Both the service-based "New Economy" and the concept of "borrowing your way to prosperity" have proven to be failures.
The decline could be lessened by government fiscal responsibility (probably a lost cause at this point), replacing "free trade" with "fair trade" because 3rd world slave labor is not "innovation") and using tariffs. Also less government regulation and smaller subsidies would remove the perverse incentives for corporations to be heavily involved in the political process (tariffs notwithstanding). Less regulations would also help small businesses compete with big business since small businesses do not have the political clout and legal departments of big businesses and find regulatory compliance more difficult.
This begs the question that any three year kid old has learned ever so well..."WHY?".
Because the people who comprise the markets around the world for goods and services (UPS included) have no money. Again, the question, "WHY?". Because the already failed socialist policies that have been eating away at Europe for over two decades were brought to the US (formerly the largest consumer market in the world) under the current administration under the cunning, but erroneous banner of "Hope and Change". Familiar with the term "wealth redistribution"? Well Sportsfans, that's what we have here. The have nots now have less, the had a littles now have not and the haves now have more. Until the governments get out of bed with the markets, the lobbyists get sent home for good and government Of The People, By The People and For The People returns to do the work it was elected to do all that I see in the future is more of the same.
Let's hope for a change.
PS: There is no recovery, there are no jobs and the middle class is losing the fight.
Another recovery summer come and gone!!!! Keep spinning barry.
A vote for anybody is a wasted vote. We could elect God with Jesus as Vice President
and the couldn't do anything as long as the political climate stays the same as it now
in the country.
Politics is the problem. Not who is President. We have had both democrats and
republicans that have been good Presidents. Not recently, but at some time in
Until Congress pulls their heads out and gets the jobs back here at home we will have no recovery. They can argue all they want about who needs to pay more or less taxes, it doesn't fix anything. Unless we are making things, real things, not vaporware, not finance, we have no economy. Right now, we have the consumption side but no supply side. YOU NEED BOTH. The country is on fire and they just want to fiddle away while it turns to ashes.
Without change, things are going to retract. Homes are going to get smaller. We will have fewer "things". Lifestyles are going to become more spartan, they have to, it's simple economics. Our consumption ultimately has to align with our supply side or we just keep digging the hole deeper. As a society, we can't survive if our main industry is selling foreign made goods to each other. Free trade only works when all the participants are at roughly the same economic level. Otherwise living standards must equalize between the participants. Good for China, Vietnam, Sri Lanka, real bad for us! But the CEOs of the corporations that outsourced made bonus for a few years!
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[BRIEFING.COM] S&P futures vs fair value: -4.80. Nasdaq futures vs fair value: -7.80. U.S. equity futures remain below their flat lines, which has been the case through the course of the night. If the current indication holds, the S&P 500 will take a step back after climbing 1.4% during the first two sessions of the week.
There was no market-moving data released this morning, but the FOMC will reveal the minutes from its latest policy meeting at 14:00 ET. Due to the ... More
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