Apple's blow away quarter could help tech stocks bounce higher again Tuesday.
The Nasdaq Monday blew off Friday's gloom with a 1% move up on strong tech buying. The Dow and the S&P 500 trailed with tiny gains. The Dow was up 0.33% or 44.95 points, and the S&P rose 0.38% or 5.7 points.
As I reported last week, tech was the bright lure in an otherwise fishy market. Well, we saw just how stinky that market could become Friday when not even tech brought buyers in the door.
But those buyers were the first ones back in on Monday, and Apple promises to keep the tech fire burning. It reported a 67% jump in fiscal fourth quarter profits earnings to $904 million or $1.01 per share, well above expectations. Apple sold more than a million iPhones and more than two million Mac computers. The company's revenues of $6.22 billion topped estimates, and it ramped up its first quarter revenue forecast to a stunning $9.2 billion, well above Wall Street's expected $8.7 billion target. Apple shares were sharply higher after hours.
Chipmaker Texas Instruments' earnings report was a different story. Its profits were 11% higher at $776 million and better than expectations. But the company disappointed with a fourth quarter revenue target below analysts' expectations. (More tech news available here).
Whither the Consumer?
American Express was also an after hours news maker. It reported a 10 percent jump in net profits, but it increased the provision for future losses in its credit card business by 44 percent. American Express' profits though were better than analysts expected. The company is a meter for the consumer, and it is closely watched for signs of strains in consumer credit. AmEx is perceived as more insulated from credit issues because it tends to cater to a higher end consumer.
American Express said it remains cautious about the overall economy. They're not the only ones. The company's bump in loan loss provisions also reminds us that the stock market is constantly looking over its shoulder, for any new signs of credit trouble.
American Express at 11 a.m. Tuesday will provide a global and regional outlook on travel trends.
The consumer will also be in focus when Wal-mart starts a two-day investor conference Tuesday in Bentonville, Ark. CNBC's Margaret Brennan will cover the meeting. At 10 a.m. central time, the retailer will provide a financial update, and at 1:45 p.m. Wednesday, CEO Lee Scott will speak on the state of the industry.
Analysts are hoping to see signs that Wal-mart is improving its merchandising and that it can gain market share. The company earlier this month issued positive earnings guidance that showed it was controlling costs.
Discount chain rival Target , meanwhile, trimmed its forecast for October sales from 3-5% to 2-4% after the bell. The company said there has been "greater-than-normal daily volatility" and disappointing sales results for the first two weeks of October.
Tuesday's market will be influenced by a major batch of early morning earnings reports, plus follow through from Monday afternoon's big earnings news. AT&T , DuPont and Lockheed are among companies reporting in the morning. Amazon.com reports after the bell.
The market though will continue to fret about tight credit and will watch carefully for corporate comment on the economy. Analysts expect to hear comments about rising raw material costs from DuPont and the impact of iPhone activations on AT&T.
Other names reporting include UPS, Chubb, Whirlpool. T.D. Ameritrade and Coach. (Get the full day's earnings expectations and results here).
What to Watch
Treasury Secretary Hank Paulson Tuesday speaks Tuesday morning on the U.S.-China economic dialogue at 8:30 a.m. New York time.
As fires continue to burn out of control in California, there has been an unprecedented evacuation of residents, massive business disruption and there will be a significant loss of property. CNBC will continue to cover this important story. The economic impact will be substantial.