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Proprietary Trading Weekly Market Recap For Friday, Apr. 25, 2014

|Includes:Apple Inc. (AAPL), FB

Stocks Fail to Hold Gains Despite Strong Earnings

Equity markets returned to focuses on earnings as two technology powerhouses beat on both the top and bottom line. While Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) took the spotlight, economic data continues to show mixed results. Tax receipts are coming in strong than expected, which will likely lead to a surplus for the government in April.

While many focused on Facebook and its ability to enhance earnings with mobile revenues, Apple surprised the street will better than expected results along with a buy back and 7:1 stock split.

Apple reported that net income grew 7% to $10.2 billion, on earnings per share of $11.62 and revenues rose 4.7% to $45.6 billion. Result were driven by much better than expected revenues from iPhones in the quarter, coming in at 43.7 million units versus expectations that ranged as low as 36.5 million units. Apple's Q3 guidance shows that the Q3 will not be quite as robust as Q2. The company is guiding to $36 to $38 billion in revenues; margins of 37% to 38%; expenses of $4.4 to $4.5 billion; and a tax rate of 26.1%.

Facebook added to the technology exuberance in the tech sector with Q1 results that comfortably beat expectations. Profit almost tripled on year to $642 million, EPS was $0.34 and revenue soared 71.2% to $2.5B. Once again, earnings were driven by mobile ad sales, which rose 19% on quarter. Expectations were for earnings of 0.24 cents per share.

Economic News

U.S. durable goods orders rose 2.6% in March from a revised 2.1% rebound in February. This compared to a 1.9% increase expected by economists. Transportation orders climbed 4.0% after rising 6.7% in, with nondefense aircraft up 8.6%. Excluding transportation, orders surged 2.0%. Nondefense capital goods orders excluding aircraft rebounded 2.2% after a 1.1% drop in February. Inventories rose 0.5%.

Mortgage lending declined to the lowest level in 14 years in the first quarter as homeowners pulled back sharply from refinancing and house hunters showed little appetite for new loans, the latest sign of how rising interest rates have dented the housing recovery.

Lenders originated $235 billion in mortgage loans during the January-March quarter, down 58% from the same period a year ago and down 23% from the fourth quarter of 2013, according to industry newsletter Inside Mortgage Finance.

The climb in mortgage rates has also hindered new home sales. Over the past 12-months, the 30-year fixed mortgage has climbed 1%. In 2014, rates have increased 0.25%, and currently stand near 4.3%.

Daily tax receipts from the Treasury indicate a respectable 9% year over year receipt rise for April to $445 billion, from the $407 billion tally from 2013. Given an expected $315 billion outlays total in April, analysts expect a $130 billion budget surplus in April.

Next week investors will continue to focus on earnings but their attention will turn to economic data such as the ISM manufacturing report, the ADP employment report and Friday's employment report.

Stocks: AAPL, FB