Apple posts numbers that power Dow, NASDAQ to big gains

But broader-based S&P 500 lags, with airlines, utilities, pharmaceuticals weighing on other sectors.

Apple logo and money.
The color of money is whatever Apple says it is. Composite image by the author, derived from public domain graphics.

WASHINGTON, February 1, 2017 – After two trading days of brutal pounding, the Dow Jones Industrials and the tech-heavy NASDAQ had ignition and lift-off Wednesday morning. After Tuesday’s dismal close the “insanely great” Q1 earnings numbers reported by tech and entertainment giant Apple (symbol: AAPL) blasted the stock into the stratosphere in after-hours trading action.

Apple’s rocket shot continued Wednesday morning at the opening bell. As of 2 p.m. ET, AAPL is up $7.88 per share from yesterday’s close, standing at 129.43. That’s a whopping 6.49 percent gain in just a few hours of trading. The shares will go ex-dividend this month as well, paying those hardy investors who stayed with the stock during its long downturn a quarterly dividend of $0.57 per share, an annualized rate of just under 2 percent.

Apple’s Q1 2017 diluted earnings (ex-items) of $3.36 per share beat last year’s same period results by $2.37 and handily broke the company’s recent three-quarters-in-a-row of earnings disappointments—a rarity for America’s biggest cap company.

It’s not that Apple ever had negative earnings over the past three quarters; it’s just that the final 3 quarters of the company’s FY 2016 reported lower profits than the previous fiscal year, something Apple investors are simply not accustomed to, at least since the return of the legendary (and now late) Steve Jobs to the company helm.

Apple’s sheer size gives it a huge influence over the rest of the market, particularly the major averages in which, due to the company’s sheer size, Apple has a big influence due to its weighting in those averages.

Apple’s much-better numbers were a surprise for many analysts, largely because the iPhone 7 models, introduced last fall, did much, much better, sales-wise, than anyone anticipated, given that the supposedly earth-shattering, beyond great, absolutely must-have iPhone 8 models, likely to be announced this coming September, are supposed to put all other smart-phone purveyors out of business. Or at least, so say die-hard Apple fans.

Read also: Trading Diary: Apple soars, we go along for the ride

At this point in the product life cycle, these 10th Anniversary iPhones—being readied for sale a decade after the first models were announced—are likely to be swell, but are highly unlikely to usher in 22nd century technologies, at least not just yet. But if sales are at or above what some optimists are projecting, the new iPhone alone could rocket Apple’s stock to new heights, although seeing these days is believing.

Nevertheless, Apple is rarely given credit for its other profit centers like iTunes, the App Store and others, all of which have steadily increased sales and profits for the mother ship. Stuff like this isn’t flashy to tech mavens, however, so they’re prone to ignore it in favor of sexy new hardware when evaluating the stocks, which in this company’s case, is a big mistake.

In coming quarters, we’ll have to see whether Apple and its constantly politically distracted CEO Tim Cook, can prove they’re back on the “insanely great” earnings trail again, en route to that iPhone 8 release.

The rest of the market seems anemic in many sectors, primarily pharmaceuticals, airlines and utilities, most of which seem eager to resume their respective slides to the bottom either because of economic developments; or, in the case of the pharmas, because the White House turned up the heat again on that sector during another White House meeting Tuesday. President Trump once again beat the price-cut drum with regard to vital drugs, and the sector today is suffering accordingly—with the notable exception of Merck (MRK), which is still in positive territory as we write this report.

In general, the Maven is still cautious on the market this week. We have about two and one-half days to go and, operating against the ongoing, crazed, and therefore unpredictable government shenanigans in Washington, anything goes and volatility is bound to increase in February. So hold on tight. The best prediction for market direction right now is no prediction at all.

Stay tuned.

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