Apple's disappointing earnings could rattle the market Thursday, as investors assess the damage to the stock and the broader tech sector.
Apple dropped 10 percent in late trading after its revenues came up short of estimates and sales of its macs and iPhones were not what the street expected. Still, Apple sold 47.8 million iPhones, a record, and 22.9 million iPads. The company also projected a softer-than-expected revenue range of $41 billion to $43 billion for its current quarter, below the more than $45 billion expected by analysts.
As for the market as a whole, some analysts believe Apple's problems will not become a problem for stocks in general. "We've spent months separating Apple out from the market. Apple went down to $500 form $700 and change, but during the same amount of time, the market has done just fine," said Daniel Greenhaus, chief global strategist at BTIG.
Stock futures were lower Wednesday evening, with the Nasdaq futures sharply lower. So far big tech earnings have been mixed, with Intel missing, but IBM and Google providing better-than-expected results. Microsoft is the next big tech name in line when it reports after Thursday's closing bell.
The pressure was particularly high for Apple to perform this quarter, since the tarnished Wall Street darling has been hit by worries about its growth and margins. Apple reported earnings of $13.07 billion, or $13.81 per share, better than expected, but its $54.5 billion revenues were short of the $54.7 billion estimated, according to Thomson Reuters.
Apple took others down with it. Its suppliers Broadcom, Qualcomm, and Skyworks were all lower in afterhours trading. Sandisk also fell, after giving weak guidance on its own earnings conference call. Sandisk said Apple accounted for almost 13 percent of its business in 2012.
"It's too big a reaction in my opinion," said Steve Massocca of Wedbush Securities. "It's trading at eight times earnings down here. If I was inclined to play Apple, I'd be buying it here…It's a cheap stock. They generated a lot of free cash in the quarter. There's some margin degradation and some market share degradation. It's still Apple, and it ain't going to be that bad."
Massocca noted that Apple is known for guiding lower, and then turning in an earnings beat.
But an interesting comment on Apple's conference call surprised traders, leading some to think Apple's lowered guidance is actually a forewarning of more trouble ahead for the company as it faces more competition in handsets and tablets.
Apple chief financial officer Peter Oppenheimer was quoted as saying: "In recent years, our guidance reflected a conservative point estimate, or results every quarter that we have reasonable confidence in achieving. Going forward, we plan to provide a range of guidance that reflect our belief of what we are likely to achieve."
By widening to a "range of guidance," the thinking is Apple now gives itself more cushion room in a less predictable world.
Another stock likely to get attention Thursday is Netflix, which vaulted 35 percent higher in afterhours trading. The company reported a surprise profit of $8 million while the market expected a loss. It also said it added nearly four million customers globally in the quarter.
"You want to see a blood bath - how about 25 percent of the float that shorts Netflix," said Massocca.
Stocks were higher Wednesday with the S&P up 2 at 1494, and the Dow up 67 at 13,779, just over three percent from its all-time high. Nasdaq was up 10 at 3153, helped by a surge in Google.
(Read More: Google Earnings Beat, While Revenue Falls Short)
Greenhaus said while the market's bias is to the upside, he sees some warning signs. "There's a number of indicators that are piquing my interest, whether it's the market's relative strength, or the J.P. Morgan Treasury survey which shows people bearish on Treasurys. The market is back to its 2012 highs, and the economic surprise indices are starting to fall into negative territory," he said.
Any correction would likely be shallow. "Our theme for 2013 is more of the same. What we've learned over the last couple of years, the market's going to fall," but "people are increasingly complacent even in the face of these falls, even if we fall over 8 or 9 percent," he said.
What to Watch
Weekly jobless claims are reported at 8:30 a.m. ET, and Markit PMI manufacturing index is released at 8:55 a.m. Leading indicators are reported at 10 a.m. Weekly oil inventories are reported at 10:30 am., and natural gas supply is released at 11 a.m.
Deutsche Bank chief U.S. economist Joseph LaVorgna said he expects claims of 355,000, after last week's surprising 335,000. "I would focus on the four-week moving average. It was 359,000, pretty much the cyclical low," he said.
"We're going to see whether the last five or six weeks of readings are legit. They might be. We pulled the moving average a little lower over the last week and tomorrow, we'll see if we sustain it," he said.
Earnings are expected from 3M, Bristol-Myers Squibb, Lockheed Martin, Nokia, Southwest Air, Union Pacific and Xerox. After the bell reports are expected from AT&T, ETrade, Flextronics, Juniper Networks, Starbucks and VeriSign.