Apple boosts stocks; Fed leaves rates alone

Apple's big earnings report lifts the Nasdaq sharply; the Dow gains 89. The Fed sees moderate economic growth but a weak jobs market. Boeing beats Street estimates. Coca-Cola will split its stock. Durable-goods orders fall.

By Charley Blaine Apr 25, 2012 12:23PM
Charley Blaine Updated: 6:43 p.m. ET

Stocks finished higher today, as technology shares enjoyed an enormous Apple rush and investors appeared to be relieved that the Federal Reserve isn't going to move interest rates higher any time soon.

The major indexes moved down slightly after the Fed did not promise any new stimulus programs. But the market rebounded when Fed Chairman Ben Bernanke said the central bank would move quickly to support the economy if conditions deteriorate. While the economy is expanding "moderately" and may pick up steam later, the Fed statement said, it continues to see only slow improvement in jobs.  It expects interest rates to remain low through late 2014.

Apple (AAPL) shares were up $49.72 to $610 after reporting blowout earnings late Tuesday. Shares of companies that make components used in Apple products are also higher: These include Cirrus Logic (CRUS), Nvidia (NVDA) and Broadcom (BRCM). The technology sector of the Standard & Poor's 500 Index ($INX) was up 2.79% on the day, its best one-day percentage gain in four months.

The market was also helped by strong earnings from Boeing (BA), Panera Bread (PNRA) and auto dealer Lithia Motors (LAD). The earnings allowed investors to shrug off what many perceive as a disappointing report on durable-goods orders.

The Dow Jones industrials ($INDU) closed up 89 points to 13,091. The S&P 500 gained 19 points to 1,391, and the Nasdaq Composite Index ($COMPX) was up 68 points to 3,030. The Nasdaq-100 Index ($NDX) jumped 71 points to 2,710, its biggest percentage gain since December. Apple was the index's biggest percentage gainer and contributed nearly 42 points to the index's gain.

Article continues below.
No rate change until 2013 at the earliest
The Fed's Federal Open Market Committee left the target for the federal funds rate at 0% to 0.25%, where it has been since Dec. 16, 2008. The federal funds rate is what banks charge each other for overnight loans and is the starting point for U.S. interest rates.

The Fed doesn't see the fed funds rate rising until late 2014, although many Fed watchers believe the rate will start to move higher some time in 2013. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, was the sole dissenter on the Fed statement. He's one who believes rates should start to move sooner.

What the Fed decision means is that interest rates for consumers will be low. But savers will continue to scramble for yields.

The markets that did react to the Fed were precious metals, largely because the Fed essentially signaled another round of quantitative easing -- purchases of Treasury securities -- won't be happening any time soon. To cause the Fed to do another round of QE requires an actual catalyst.

Many traders, who are addicted to quantitative easing, cheered when Bernanke said the Fed would move again in the event of a major deterioration in the economy.

Gold had traded as high as $1,645 an ounce before the Fed announcement and dropped to as low as $1,625 right after the announcement. Gold settled at $1,642.30 an ounce, down $1.50.

Silver was off 39 cents to $30.356 an ounce. But copper was up 2.75 cents at $3.70 a pound.

Crude oil settled up 57 cents to $104.12 a barrel. Brent crude was up 80 cents to $118.96.

The national average price for retail gas was $3.84 a gallon, down from the Tuesday's $3.849, according to AAA's Daily Fuel Gauge Report. It was the 16th decline in 19 days since peaking at $3.936 on April 5-6.

Interest rates were higher, with the 10-year Treasury yield rising to 1.984% from 1.961% on Monday. The dollar was little changed against major currencies.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$104.12

$103.55

1.07%

5.35%
(per barrel)











Heating oil (-HO)

$3.1669

$3.1346

-0.10%

8.67%
(per gallon)











Natural gas (-NG)

$2.1700

$2.0630

2.07%

-27.40%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.1191

$3.1241

-5.71%

17.37%
(per gallon)











Brent crude 

$119.12

$118.16

-3.06%

10.93%
(per barrel)











Retail gasoline

$3.8400

$3.8490

-2.17%

17.22%
(per gallon; AAA)












Thursday brings the weekly report on jobless claims as well as a report on pending home sales.

Exxon Mobil (XOM), up 54 cents to $86.85, reports first-quarter results before the open. Also due on Thursday: Royal Dutch Shell (RDS.A), Amazon.com (AMZN), Starbucks (SBUX), PepsiCo (PEP) and Kellogg (K).

So far this week, the Dow is up 0.5%, with the S&P 500 up 0.9% and the Nasdaq up 1%.

Apple's big report
Apple earned $12.30 a share on revenue of $39.2 billion. Analysts were expecting earnings of $10.02 a share on revenue of $36.69 billion. About $22.7 billion in revenue was from sales of the iPhone.

Apple said it sold 35.1 million iPhones and 11.8 million iPads in the quarter. Apple had forecast fiscal-third-quarter earnings of $8.68 a share on revenue of $34 billion. Analysts had expected a profit of $9.93 a share on revenue of $37.45 billion.

The news caused many analysts to raise price targets on the stock -- after confidently expecting weakness in the company's results.

Cirrus results suggest a new iPhone in the fall
Audio-chip-maker Cirrus Logic, up $2.29 to $23.09, was the top performer among stocks in the Philadelphia Semiconductor Index ($SOX). Apple is Cirrus Logic's biggest customer, buying chips for the iPhone and iPad tablet device.

After the close, Cirrus shares jumped an additional $1.83 to $24.92, after the company said sales in its fiscal first quarter will be soft but will jump sharply in the second.

Investors see the second quarter-guidance as a signal that Apple will come out with a new iPhone in the fall.

Also after the close, casino operator Las Vegas Sands (LVS) shares fell 53 cents to $58.25  after reporting profits doubled from a year ago, thanks to strong business in Singapore and Macau.

Boeing beats Street estimates; Coca-Cola wants a 2-for-1 stock split

Aircraft maker Boeing also beat analysts' estimates with its first-quarter earnings Wednesday as revenue rose 30%, largely reflecting increased commercial aircraft deliveries. Boeing earned $1.11 a share on sales of $19.4 billion. Analysts had estimated profits of 94 cents a share on revenue of $18.4 billion. Shares rose $3.87 to $77.08.

Coca-Cola (KO) shares were up 81 cents to $74.93 after the soda giant's board voted to recommend a two-for-one stock split. The split would be the 11th in the stock's 92-year history and the first in more than a decade. Shareholders would vote on the proposal at a special meeting set for July 10, with the split occurring on or about July 27.

Construction-equipment maker Caterpillar (CAT)  reported first-quarter profit Wednesday of $1.58 billion, or $2.37 a share, topping estimates for $2.13. Sales rose 23% to $16 billion, falling short of forecasts for $16.18 billion. As a result, shares were down $4.96 to $103.44, the laggard among the 30 Dow stocks.
 
Baidu (BIDU), the Chinese Internet search company, said first-quarter earnings rose 76%, but its revenue outlook for the second quarter was less than Wall Street's estimates. Baidu forecast revenue of $847.2 million to $867 million for the second quarter. Analysts expect revenue of $870 million.  Shares were off $1.01 to $134.82.
 
Sprint Nextel (S) shares dropped 4 cents to $2.43 after reporting a first-quarter loss of $863 million, or 29 cents a share, on revenue of 8.73 billion. Analysts had anticipated a loss of 42 cents a share on sales of $8.7 billion.

A decline in durable-goods orders
The Commerce Department said durable-goods orders fell 4.2%, the biggest decrease in three years, to a seasonally adjusted $202.57 billion in March. That's more than the 1.7% decline economists had expected. Orders for goods that last more than three years rose 1.9% in February, revised from 2.4%.

Most of the decline, however, was due to a decline in commercial-aircraft orders and an upward revision in core capital goods orders in February.

Boeing leads the Dow; Edwards Lifesciences tops the S&P 500
Twenty-four of the 30 Dow stocks were higher, led by Boeing and American Express (AXP), up $1.28 to $58.91. The laggards were Caterpillar and Wal-Mart Stores (WMT), down 41 cents to $57.36.

A total of 432 S&P stocks were higher, led by Edwards Lifesciences (LW), maker of heart valves and other medical equipment, and Apple.

Ninety-one Nasdaq-100 stocks were higher, led by Apple and Avago Technologies (AVGO), up $2.30 to $34.98, and Broadcom, up $2.09 to $36.51. Like Broadcom, Avago is a chip maker and component supplier to Apple.

The laggards were freight-services company C.H. Robinson Worldwide (CHRW), down $4.92 to $60.91; motor-fuel marketer Hess (HES), down $3.86 to $51.18; and Caterpillar.

The laggards were C.H. Robinson Worldwide and Netflix (NFLX), down $1.33 to $86.35.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%  0.080%

28.57%  800.00%
5-year Treasury note 

0.841%  0.838%

-19.37%  1.33%
10-year Treasury note

1.984%  1.961%

-10.47%  6.04%
30-year Treasury bond

3.146%  3.114%

-5.95%  8.90%
Currencies











U.S. Dollar Index

79.111  79.326  -0.03%  -1.75%
British pound

1.6176  1.6150  1.04%  4.11%
(in U.S. $)

          
U.S. $ in pounds

£0.618  £0.619  -1.03%  -3.95%
Euro in dollars

$1.32  $1.32  -0.90%  2.06%
(in U.S. $)

          
U.S. $ in euros

€ 0.756  € 0.758  0.91%  -2.02%
U.S. $ in yen 

81.50  81.32  -1.79%   5.70%
U.S. $ in Chinese

6.32  6.30  0.05%  -0.04%
yuan

            
Canada dollar

$1.017  $1.013  1.50%  3.69%
(in U.S. $)

          
U.S. dollar 

$0.984  $0.987  -1.47%  -3.56%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,642.30

$1,643.80

-1.77%

4.82%
(per troy ounce)











Copper (-HG)

$3.700

$3.673

-3.27%

7.68%
(per pound)











Silver (-SI)

$30.3560

$30.7460

-6.55%

8.74%
(per troy ounce)











Wheat (-ZW)

$6.2650

$6.3250

-5.18%

-4.02%
(per bushel)











Corn (-ZC)

$6.0100

$6.080

-6.68%

-7.04%
(per bushel)











Cotton 

$0.9080

0.9146

-3.32%

-0.96%
(per pound)











Coffee

$1.7675

1.835

-4.46%

-23.04%
(per pound)











Crude oil (-CL)

$104.12

$103.55

1.07%

5.35%
(per barrel)










 

87Comments
Apr 25, 2012 2:11PM
avatar
The problem with high gas prices could actually be solved rather easily. All Congress needs to do is to pass a Bill that requires Oil Speculators to take 100% full physical delivery of every oil future that they buy ahead and that way they would have to pay storage fees,etc. and than see how many of them keep buying. Currently, they never see or have to deal with any of the futures they buy ahead, all they do is profit big from them. This would stop the Greed Machine in its tracks.
Apr 25, 2012 2:43PM
avatar
Until both sides of the aisle are willing to take blame for this mess, we will never get out of it. Finger pointing does absolutely nothing but turn seemingly intelligent people into a bunch of school yard brats. Look at the discussion boards all over the internet.
Apr 25, 2012 3:07PM
avatar
I have to "crack a smile" when I see the supporters of oil speculation us the other commodities as an example.  Are we going to require gold, silver, copper, speculators to take possession - no.  Sure copper is an integral part of many products, but to compare any of these commodities to oil is beyond comparing apples to oranges.  More like comparing apples to a 16penny nail.  The speculators do need to take possession and incur the full cost as they continue to drag down this economic recovery with higher fuel prices.
Apr 25, 2012 1:42PM
avatar
Interesting that prior to Apple releasing their earnings the analysists and other experts were all saying that Apple may report a soft quarter etc. and as result the stock dropped over 10% and then "POOF" overnight they "magically" blow out their earnings forecast and the stock gains back almost everything it had lost in the previous week or so.  I also find it interesting that not one of the analysts or experts saw the blow out earnings report happening as they all were downplaying the earnings as being soft etc.  HUMMM...makes you wonder if some "collusion or manipulation" went on or are all the so called experts really that bad in tracking Apple?  
Apr 25, 2012 3:55PM
avatar

Tp LovethPO:

 

One of Obama's first piece of legislation that was passed was complete Government take over of the student loan business eliminating any interest rate competition between lenders.  The bill was passed by both Houses of Congress that were, at the time, controlled by democtrats.  As insurance against loosing future elections and arguments with the right they included a provision that interest rates would double at the end of 2012, unless the law was extended.  That is why Obama can now claim if the Congress (read rebublicans) don't get on board interest rartes for students will double! 

 

This is also one reason for an all time high in student load debt.  Government control of tusition costs and the lending to pay for it!

Apr 25, 2012 3:22PM
avatar
Helicopter Ben must have a fuzzy crystal ball.  Forecasting growth and inflation 2 years out. It looks like QE is coming since it worked so good before. How can these people be so out of touch?
Apr 25, 2012 1:21PM
avatar
someone slipped up just other day everyone worried because apple products had poor showing !!!!! Now they are seeing strong sales?? Wish the economy would turn around as quick as the computors do!!!!!!!!! Magical isn't it????????
Apr 25, 2012 3:23PM
avatar

sure enough....PUMP....DUMP....CHUMP!

you are only letting the big dogs fleece you....

 

You're only getting fleeced if you buy high and sell low.  What don't you guys get about this?  Daily market swings don't affect you unless you're a day trader or you're buying really risky stocks.

 

Buy high-yielding stocks from solid companies, hold them, and reinvest the dividends.  It isn't aeronautical engineering.  You think Warren Buffet got rich by day trading?  No, he's the king of "buy and hold" value investing.

Apr 25, 2012 2:49PM
avatar

Qe3 4 and 5 r coming

 

controlled media is lying as usual

Apr 25, 2012 3:06PM
avatar

BTW - there is nothing wrong republicans or democrats - I own one of each just in case...

Apr 25, 2012 1:45PM
avatar
Endeavor    Your still here   bad mouthing all the good Americans    go to France
Apr 25, 2012 2:21PM
avatar

All Congress needs to do is to pass a Bill that requires Oil Speculators to take 100% full physical delivery of every oil future that they buy ahead and that way they would have to pay storage fees,etc. and than see how many of them keep buying.

 

Are you going to require that commodities traders to take physical delivery of copper, gold, silver, etc, etc, etc as well?  Many commodities, particularly copper, are just as integral to the economy as oil.

Apr 25, 2012 4:34PM
avatar
The Fed  ( A private company )  earns money on every dollar they print.  They have lent 2 trillion to the treasury via the bond market.   Now who are these people that have 2 trillion to loan to the Government?   Kinda like a snake eating its own tail don't you think?
Apr 25, 2012 4:10PM
avatar

"Are you going to require that commodities traders to take physical delivery of copper, gold, silver, etc, etc, etc as well? Many commodities, particularly copper, are just as integral to the economy as oil."

 
Above statement not only approaches the boundaries of ignorance but surpasses absurdity at every level of rational coherent thought. To compare or equate the global economic impact value of gold, silver, copper etc. etc. put all together with oil is utter nonsense. Most of these other "integral" commodities wouldn't even be available since mining, extraction, refining, processing etc. all require some form of energy and machinery directly or indirectly contingent upon oil or a byproduct thereof. Speculation in oil is a wart on the world economy and should be excised.
Apr 25, 2012 2:58PM
avatar

physical inventory is  impossible since they cannot since they are taking a chance on what be there!!!! but they charge for it at the pump even though they are not sure what theu really have?

catch 22!!!!!  speculation is just a way to steal what they do not physcaily have at hire prices before they refine it .Ponzie scheme in reverse. 

Apr 25, 2012 4:29PM
avatar
 

Darn, every time I want to post something really "educational", this site saids I am either spamming or hyper linking.

Apr 25, 2012 2:23PM
avatar

sure enough....PUMP....DUMP....CHUMP!

 

you are only letting the big dogs fleece you....

Apr 25, 2012 6:16PM
avatar
Longbeach, you should call it a night. You've managed to put your foot so far down your throat that you'll have to move it to wipe your azz!!!!!!!!!!
Apr 25, 2012 5:02PM
avatar
Today it was Apple...who will tomorrow's stock market savior be? 
Apr 25, 2012 6:25PM
avatar
I'm going to go eat. I'll leave you with this chuckle;
 His screen name is longbeach, but he clearly rides the SHORT BUS!!!!
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