Apple's Roller-Coaster Ride to Set Market Tone
Apple briefly got some of its shine back, after the company delivered a package of capital programs that shareholders have been clamoring for.
But the market turned on it quickly late Tuesday, sending the stock nearly 2 percent below its closing level, after immediately trading as much as five percent higher in the afterhours session. Even if Apple shares do not gain Wednesday, the company though may have put a floor under its stock with the announcement of its 15 percent dividend hike and giant share repurchase program.
Apple, however, disappointed with comments on slower growth and lower margins, and a lack of new products on the near horizon. The company late Tuesday reported fiscal second quarter earnings of $9.55 billion, or $10.09 per share on revenues of $43.6 billion better than expected on the top and bottom line.
Apple also announced plans to give $100 billion to shareholders by the end of 2015, the largest corporate buyback authorization ever, the company said. It increased its share repurchase program to $60 billion and said it would boost its quarterly dividend to $3.05 per share.
"The market was kind of setting up for Apple to lay an egg here, and it didn't. It kind of pulled a rabbit out of its hat, not to mix metaphors," said Art Hogan of Lazard Capital Markets.
With its stock crushed by some 40 percent since September, shareholders have been looking for Apple to dole out some of its cash hoard. The moves announced Tuesday makes Apple the largest dividend payer in the world, according to S&P.
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But Apple also said it expects third quarter revenue of $33.5 to $35.5 billion, below forecasts of $38.25 billion.
"They had a better quarter than expected, both top and bottom line," said Hogan. "Their guidance was a little disappointing but as always, conservative. I think everyone's going to be happy about them raising the capital allocation for shareholders."
Apple CEO Tim Cook acknowledged the company's slowing growth and lower margins on an earnings call. But Steve Massocca of Wedbush Securities said the market expects Apple to be conservative with guidance. "It's clearly good news," he said of the dividend and buyback. "Just psychologically, you knew he was going to put out good news."
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There is a parade of major earnings Wednesday, including Boeing, Procter and Gamble, Eli Lilly, and Ford. But it could be Apple that has the most impact on sentiment.
On the data front, there is durable goods at 8:30 a.m. ET, expected to decline 2.9 percent. There is also a $35 billion five-year note auction at 1 p.m. ET.
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Other companies reporting before the opening bell include Barclays, GlaxoSmithKline, Barrick Gold, Credit Suisse, Eni, General Dynamics, Hess, Lorillard, Motorola Solutions, Ericsson, Northrop Grumman, ABB, Nasdaq OMX, Thermo Fisher Scientific, WellPoint, Whirlpool, Owns Corning, Carlisle, Tupperware, and Dr. Pepper Snapple.