Apple (AAPL) carried markets higher yesterday. The techs did not flinch as the pitiful economic news was released, and that was based solely on the strength of the company's earnings while the other major indices fell from their highs on the news in pre-market trading. Such is the case when one stock makes up such a large portion of the various indices and ETFs, but now we get to watch as the Apple effect is played out in the earnings of those who make the parts that make the gadgets that Apple sells.
It is jobs Thursday, and that means we have the Initial Claims (Consensus 373k) and the Continuing Claims (Consensus 3300k) along with Pending Home Sales (Consensus 0.5%).
Looking at Asian markets we see markets are mostly higher:
- All Ordinaries - up 0.25%
- Shanghai Composite - down 0.09%
- Nikkei 225 - up 0.01%
- NZSE 50 - up 0.03%
- Seoul Composite - up 0.10%
In Europe markets are lower:
- CAC 40 - down 0.99%
- DAX - down 0.68%
- FTSE 100 - down 0.07%
- OSE - down 0.05%
Technology
Apple, as mentioned above, carried the markets higher yesterday and their quarter led to great quarters at companies that supply them with parts. Everyone assumed that the company would carry the markets higher as one of the few plays with stellar earnings growth, but as you look at the numbers from others last night it looks like the Apple ecosystem/supply-chain as a whole will be helping the market. The shares were up $49.72 yesterday to close at $610.00, but shares were even higher than that during the day.
Teradyne (TER) came out last night and beat earnings. Their first quarter earnings beat by $0.02/share with profit coming in at $33.6 million. The company also exceeded the revenue estimate and guided higher for the second quarter on both the EPS numbers ($0.53-0.62) and the revenue numbers ($490-530 million). The company attributed the solid quarter and future guidance to strength in high performance mobile devices. Shares were strong during the trading day rising $0.80, or 4.99% but after the earnings release shares rose another $1.17, or 6.95%. This is a play we have been in before and will reenter once the shares come back moving forward. In this industry you never have one good quarter, but rather a few good ones in a row as the cycle picks up.
It has been obvious to us for some time that Intuit (INTU), with their Turbo Tax software, was causing some problems for those tax preparers servicing the bottom of the market. Yesterday the shares closed up $1.11 to finish at $57.40 with no trades after hours. H&R Block (HRB) announced earnings after the close and the news was bad. Shares were down 16.37% as the company announced they will be closing 200 company owned offices and laying off 350, the same numbers they did just over a year ago. This is certainly not a good thing, and it is looking like a trend. With another H&R Block competitor having filed bankruptcy recently, and HRB still having served a record number of clients this tax season, it is obvious that Turbo Tax is compressing margins.
Retail
Gap (GPS) was up $0.70 to $27.89/share in trading yesterday while also setting a new 52-week high during trading. The shares closed strongly, although they fell just short of closing at the high for the day which continues a trend of the company's shares rising to new 52-week highs over the past few months. We have liked the shares for some time now, and have recommended holding during the entire run-up. Earnings are on deck for May 17, and if one did not have shares we would recommended buying into earnings as everything we have seen points to a beat.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
