Investors were tipping toward a “risk-off” position in the stock market today. Conflicting reports about the trade agreement, impeachment concerns and economic worries pushed stocks down Thursday.
All said, the SPDR S&P 500 ETF (NYSEARCA:SPY) slipped 0.27%, the SPDR Dow Jones Industrial Average (NYSEARCA:DIA) fell 0.5% and the PowerShares QQQ ETF (NASDAQ:QQQ) eked out a 5 basis point gain.
The decline comes as little concern though, given that the S&P 500 had hit a new high in each session this week coming into the day. We made this observation on Wednesday, the same day the Federal Reserve cut interest rates by 25 basis points.
With the somewhat muted action out of big companies reporting earnings, and the downright terrible action in others, it left little room on the upside in the short term.
All Eyes on Apple
Obviously Apple (NASDAQ:AAPL) was a main focus for investors on Thursday, after it reported its fiscal fourth-quarter results after the close Wednesday. Shares ended the day higher by 2.3%, as earnings of $3.03 per share topped estimates by 19 cents. Revenue of $64 billion beat analysts’ expectations by $1.2 billion and grew 1.8% year-over-year.
iPhone sales totaled $33.4 billion against a consensus of $32.8 billion, while Wearables, Home and Accessories sales totaled $6.5 billion and topped estimates of $5.9 billion. Finally, Services revenue totaled $12.5 billion, easily beating expectations of $12.2 billion. Regarding the latter, CFO Luca Maestri says Apple now has over 450 million subscriptions across its ecosystem. That’s 30 million more than last quarter and up 120 million (up 36.4%) year-over-year.
Management’s first-quarter outlook has revenue in the range of $85.5 million to $89.5 billion, while consensus estimates sits at $86.7 billion. Management expects gross margins between 37.5% to 38.5%, higher than the estimate of 37.6%.
Wall Street analysts are already out with their take — and the bulls should like it. Wedbush raised their price target to $300, up from $265. The analysts also maintain their “outperform” rating. Piper Jaffray analysts also maintain their “overweight” rating, raising their price target to $270 from $243.
Movers in the Stock Market Today
Starbucks (NASDAQ:SBUX) opened higher on the day, but couldn’t hold onto its gains. The company reported in-line earnings results and topped revenue expectations. Sales of $6.8 billion grew 7.1% year-over-year and beat estimates, while comparable-store sales beat expectations as well. Management also gave a 13.9% hike to the dividend.
SBUX was in InvestorPlace’s Top Stock Trades column.
Altria (NYSE:MO) shares were rallying in pre-market trading after better-than-expected earnings and revenue estimates. Despite an optimistic three-year outlook, shares still slipped about 2.6%. It likely comes as investors digest the company’s $4.5 billion impairment charge on its Juul investment.
Shares of CyrusOne (NASDAQ:CONE) were under pressure Thursday, falling 4.4%. Despite beating on earnings and revenue expectations, management said they are not pursuing a sale at this time, contradicting recent reports.
Facebook (NASDAQ:FB) was the other FAANG name in the spotlight, alongside Apple. The company beat on earnings and revenue estimates, with the latter rising almost 30% year-over-year. All said, FB climbed just 1.8% and desperately needs to hold its breakout point.
Economic Worries
The initial concern of the morning is a recession in Hong Kong, as the economy contracted 3.2% sequentially in Q3. That’s the worst quarter-to-quarter slide in a decade, as the ongoing protests rattle its economy. The Hong Kong Monetary Authority cut its interest rates by 25 basis points in response.
Those worries weren’t helped by the Chicago PMI results. For the month of October, the report rang in at 43.2, badly missing expectations of 48.3. It was also down from the prior reading of 47.1.
While admittedly a concerning report, one would have to think the strike at General Motors (NYSE:GM) didn’t help matters. We’ll get a better idea in less than 24 hours though, with the non-farm payrolls report due up Friday morning.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL.