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NASDAQ dragged lower as investors' upset the Apple cart

Friday, January 25, 2013 by Proactive Investors

Apple dragged the U.S. equity markets lower overnight as the company issued a disappointing revenue forecast, with the smartphone maker closing more than 12% lower. Netflix though was a shining light and jumped over 42%. In the pre-market Dow futures are currently 59 points higher. Australian markets will look to open stronger - with the SPI 200 up 16 points.

Apple dragged the U.S. equity markets lower overnight as the company issued a disappointing revenue forecast, with the smartphone maker closing more than 12% lower. Netflix though was a shining light and jumped over 42%. In the pre-market Dow futures are currently 59 points higher. Australian markets will look to open stronger - with the SPI 200 up 16 points.

There were some big winners - and some even bigger losers - on the U.S. equity markets overnight.

Apple's (NASDAQ:APPL) lackluster quarterly results weighed on two major market indices in the U.S. Thursday, with upbeat economic data lifting only the Dow far into positive territory.
 
At one point today, the S&P 500 topped 1,500 for the first time in more than 5 years, but was lately barely higher over the previous session, hovering around 1,498.

By the close the Dow Jones had gained 46 points to 13,825, while the NASDAQ slumped 23 points to 3131.


Apple shares slump

Shares of Apple (NASDAQ:AAPL) were down over 12% to $450.50 as the company issued a disappointing revenue forecast, and said it sold just under 48 million units of the smartphone - still a record, but at the low end of Wall Street estimates. The company earned $13.81 per share for its fiscal first quarter, above Street estimates of $13.47, but revenues fell short.
 
Its stock was lately trading around $452.6 - more than $61 below its closing price yesterday, and rougly 54% below its all-time high of $700 when it launched the iPhone 5 in September. At least 30 analysts lowered their price targets for the iPhone maker after its quarterly report, with the average reduction totaling about 15%, according to data from Thomson Reuters.
 
UBS' Steve Milunovich cut his price target to $600 a share from a previous $650, while keeping his buy rating intact. The stock has a big impact on markets, as it makes up 10% of the Nasdaq Composite and 3.6% of the S&P 500.
 
But encouraging global data helped counter the disappointment.
 

Netflix shares soar

Netflix (NASDAQ:NFLX) shares jumped over 42% after the company posted strong fourth quarter results, supported by growth in U.S. video streaming sUBScribers.
 
Also last night, Amgen (NASDAQ:AMGN) posted fourth quarter earnings and sales that beat estimates, and issued an upbeat forecast for 2013, saying it's on track to hit the upper end of its 2015 revenue forecast two years early.
 
SanDisk (NASDAQ:SNDK) also topped views, with a fourth quarter profit of $1.05 per share compared to estimates of $0.76. The chipmaker, however, also issued shares a disappointing revenue outlook.
 
Earnings season continued in full swing Thursday, with a number of corporate heavyweights reporting results.
 
Nokia Corp (NYSE:NOK) shares were down over 8% after the handset maker said it swung to a profit in the fourth quarter, coming in ahead of market views, but the company missed its sales forecast and suspended its dividend.
 
Dow component 3M (NYSE:MMM) said Thursday its fourth quarter profit rose, meeting estimates as sales were higher at $7.39 billion, compared to $7.09 billion a year ago. Sales beat consensus expectations. Looking ahead, 3M said it continues to expect 2013 profit of $6.70 to $6.95 a share, compared to the analyst estimate of $6.86 a share.
 
Xerox Corp.(NYSE:XRX) shares were up over 2.7%, despite reporting that profit fell 11% in its fourth quarter, as adjusted profit and revenue topped views. The company said it expects a first quarter adjusted profit between 23 and 25 cents a share, compared to expectations of 24 cents a share.
 
After the closing bell, Microsoft (NASDAQ:MSFT), AT&T (NYSE:T), and Starbucks (NASDAQ:SBUX) headline the list of those reporting quarterly earnings results. Investors will be eyeing Microsoft and the impact of the launch of Windows 8 on its results.
 
Elsewhere, Pfizer (NYSE:PFE) shares rose after the drug maker reported positive results from a drug study for depression.
 
United Continental (NYSE:UAL) also rose over 1% after it said it is cutting 600 jobs to cut costs. The company reported a bigger quarterly loss, but results topped expectations, and it said bookings were solid.


Economic news

On the economic front Thursday, U.S. jobless claims last week dropped 5,000 to 330,000 - marking the lowest level since January 2008. The consensus estimate was for claims to rise from 335,000 to 360,000.
 
The preliminary flash manufacturing index for the U.S., released by Markit, is at 56.1 this month versus a final December reading of 54.0. The flash is well above 50 to indicate strong monthly growth and is well over December to indicate an even faster rate of growth in general activity. It was expected to fall to 53.0 in January from 54 in December.
 
And the Conference Board said that its index of leading economic indicators rose 0.5% in December, exceeding estimates of 0.4%, after falling 0.2% in November.
 
Overseas, the initial reading of HSBC's monthly purchasing managers' index for China in January rose to a 24-month high of 51.9 versus 51.5 in December. A reading over 50 means expansion in manufacturing activity.
 
Meanwhile, the preliminary Markit euro-zone composite purchasing-managers’ index showed activity continued to contract across the region, but at the slowest pace in 10 months.
 
And according to reports in the Wall Street Journal, North Korea's National Defense Commission said a nuclear test of a higher level will be carried out.
 
 
Commodities
 
Gold futures tumbled on Thursday as investors reacted to a lower price outlook from Morgan Stanley and as the yellow metal's safe haven appeal was dulled amid positive economic data.
 
February gold futures fell $16.80, or 1%, to settle at $1,669.90 on the Comex division of the New York Mercantile Exchange. Future prices haven't settled above $1,700 since mid December.
 
Meanwhile, crude-oil futures rose Thursday on the economic data from the U.S., China and the euro zone, which worked to offset a bigger-than-expected rise in crude supplies. Crude oil for March delivery rose 72 cents, or 0.8%, to finish at $95.95 a barrel on the New York Mercantile Exchange.
 
Weekly inventories data showed soft demand from refineries made for a 2.8 million barrel build in oil inventories which, at 363.1 million barrels, remain well above their upper limit.
 
Gasoline inventories fell 1.7 million barrels though distillate inventories, despite weak production, did rise, up 0.5 million barrels.
 

Europe
 
European markets finished broadly higher today with shares in Britain leading the region. The FTSE 100 closed up 1.09% while France's CAC 40 gained 0.70% and Germany's DAX rose 0.53%.

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