Tuesday was like watching a great prize fight or a Rocky movie. The market was seemingly down for the count before getting up to stage an inspirational comeback. The fight went on; once again, when the market was on the precipice of disaster (smart) buyers materialized.
The sessions seemed doomed right out the gate after the negative reactions to most earnings releases; even those that were clearly beats as the theme of “as good as it gets” continued to sway the crowd.
However, midway through the session when the market could have broken down sharply, stocks staged an inspirational rebound led by technology names.
The leaders included IPG Photonics Corp (IPGP) (+9.0%) on earnings and two Apple-related names; Qorvo (ORVO) (+6.4%) and Skyworks Solutions (SWKS) (+4.86%). During the session, all eyes were on Apple (AAPL), which held up nicely despite the widespread speculation of a disastrous earnings report.
It turns out perhaps those Apple buyers were right as the company posted very impressive results and a solid guidance:
- Revenue: $61.1
- Earnings: $2.73
- iPhone Shipments: 52.1 million
- Average Selling Price: $728
- iPads: 9 million
- Macs: 4 million
- Services: $9.2 billion (+31%)
- Guidance (high end): $53.5 billion revenue
- Gross Margin: 38.5
- Buybacks: $100 billion
- Dividend: $0.73 (+16%)
I must say that service number is a monster, and it indicates Apple can grow its business beyond devices. Tim Cook still has a chance to supercharge growth in other areas even after allotting $100 billion to share buybacks, a move sure to anger politicians that think “profits” is a four-letter word - even if the news help tens of millions that own the stock in a retirement account.
Tech To The Rescue
Overall, tech helped to lift all the major indices off the canvas with the NASDAQ and the S&P 500 closing at the highs of the session.
The Dow Jones Industrial Average weighed down by industrial names also climbed off the canvas to erase 300-points but finished slightly in the red. I have to point to this chart formation, which continues to get to the climatic end of a pennant formation, as it suggests a monster move.
It just doesn’t indicate in which direction.
Yesterday, the Federal Reserve wrapped up its Federal Open Market Committee (FOMC) gathering. The consensus is that there will be no action on rates, but perhaps greater clarity on potential future rate hikes. The dynamics of the economy have changed a lot since the last FOMC meeting.
Key Concerns
- Consumer slowing
- Manufacturing slowing
- Dollar surging
- Yields edging higher
- Commodities soaring