Earnings Trump Economic Data In Early Trade
The markets are nicely higher in early trading on the heels of some better than exepcted earnings reports. There was a disappointing economic report this morning in the form of durable goods, which fell -4.2% in March. But investors are giving the data a pass and focusing on earnings.
The big earnings report last night was of course Apple (AAPL). In case you missed it, AAPL blew out the numbers by more than $2. It also sold 5 million more iPhones than the analysts were forecasting, and gross margins also posted significant upside.
I had been saying coming into the report that the recent action in AAPL seemed to me to be reflecting dramatically lowered expectations for the earnings report. So I felt the stock was poised to bounce on the report, even if they only posted a mild beat. But the stock has ramped on the earnings announcement, up by more than $50 (or 10%) back above the $610 level.
Stocks rising on earnings reports:
- S, MOS, BA, HOG, GNC, PNRA, FTNT, AMGN, NSC
- ABB, CAT, GD, BIDU
The 10-year yield is getting another small bounce, but is still bumping its head at the 2.00% level, which has been resistance all year, despite a few brief spikes above those levels.
And the VIX is down 4% to 17.36.
Trading comment: The market is up a lot in early trading, but it remains to be seen if the strength can last into the close. We also have the FOMC announcement today, and I think many are looking for the Fed to provide some hints about QE3. I don't think the Fed is going to go there right now. My guess is that they remain on point with what they have been saying recently. I think they will reiterate holding rates low into 2014, and again say that they see inflationary pressures as temporary.
KAM Advisors has long positions in AAPL