‘No Subtle’ Reaction Expected to Apple Earnings
Apple earnings and a Microsoft product launch keeps technology names at the forefront Thursday in a market that has been mostly punishing the sector for the last month.
Apple earnings will be key as Apple has an outsized influence on the S&P 500 index and the Nasdaq. Its after-the-bell earnings also come after a series of earnings disappointments in tech, including from Microsoft , Google and IBM .
Microsoft unveils its next generation operating system, Windows 8 Thursday. It also is rolling out a new tablet product, Surface, its first foray in the tablet market that Apple created.
Apple stock has gone downhill from $705 on Sept. 21 to $615 in the after-hours session Tuesday. "The biggest news is Apple at the end of the day," said Peter Boockvar of Miller Tabak. He added even with its correction the stock is a large percent of the S&P 500. The S&P tech sector is down 6.3 percent this month.
"I think the stock is going down for a variety of reasons, and it's now just an upgrade company, and the best of its run is over and the competition is getting hotter," said Boockvar. Analysts will be watching how many iPads Apple sold in the quarter. While unveiling the iPad mini Tuesday, Apple CEO Tim Cook said that Apple had recently sold its 100 millionth iPad. That comment had some analysts thinking that the sales may now be lower than expected.
Apple is expected to earn $8.81 on revenues of $35.8 billion for the fourth fiscal quarter, according to Thomson Reuters.
"I think there's going to be no subtle reaction to Apple," Boockvar said. "It's either up $50 or down $50."
There are also dozens of earnings reports coming ahead of the open, including consumer giant Proctor and Gamble, Conoco Phillips, Altria, Novartis, AstraZeneca, Aetna, CME Group, Colgate-Palmolive, Credit Suisse, McKesson, Noble Energy, Occidental Petroleum, Potash, Pulte Group, Rayonier, Raytheon, Sherwin-Williams, Sprint, Starwood Hotels, UnderArmour, and Raytheon.
Amazon.com reports after the bell as does HealthSouth, Chubb, Cabot Oil and gas, Expedia, Perkin Elmer, Coinstar and Eastman Chemical.
Economic news will also be important, as the weekly jobless claims number follows two weeks of volatile reports. Claims and durable goods are released at 8:30 a.m. ET.
"Is (claims) more like the 330,000 or the 365,000? My guess is it's more the 365,000," said John Canally, economist and strategist at LPL Financial. "Durable goods - there's a case to be made there that you get another weaker number and it's just attributed to business uncertainty around the end of the fiscal cliff. The consensus is looking for a gain on core. If that misses, it's really easy blame to say people are just uncertain around the fiscal cliff."
"The stock market seems to be in a cranky mood," said Canally, adding it was refreshing that stocks sold off on earnings news, and not the latest headlines from Europe as it had been doing.
Canally said the Microsoft and Apple product launches this week are also important in that they get new products in front of consumers, just ahead of the holiday season. Separately, RBC was reported to have said Apple was set up well for the holidays with its refreshed line, and that the iPad mini could ship six to eight million units, adding $2 to $2.25 billion in revenues.
The selloff in crude futures continued Wednesday, with West Texas Intermediate crude sliding 1.1 percent to $85.73 a barrel on the Nymex. The Energy Information Administration said crude stockpiles rose by a surprise 5.9 million barrels to 375 million barrels in the week ended Oct. 19. That is the highest level for this time of year since the EIA began keeping its data in 1982. Domestic oil output is at its highest level since 1995, and is adding to the supply.