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Market Update

Tentative Stock Trading Near Records Ahead of Apple’s Earnings

July 21, 2015

All eyes are on Apple (AAPL), limiting stock market action in the meantime. AAPL, a component of S&P 500 (SPX), has the potential to lift the broad index to fresh records if its post-close earnings deliver. In fact, that’s a little troubling to some observers. Where’s the breadth in this latest move up?

Apple sentiment can tend to lift most tech shares, period. The tech-studded NASDAQ 100 is on track for a fourth straight session in record-high territory, although the volume behind this record-reaching leg has been thin. Apple’s not alone of course. Microsoft (MSFT), GoPro (GPRO), and Yahoo (YHOO) are among the several tech firms due with quarterly results later Tuesday.

As for other potentially stock-impacting markets, commodities have been roundly walloped. Crude prices continue their July retreat (more on this below). At the same time, precious metals are nearing their lowest prices in five years as rising rate expectations lift the U.S. dollar. Falling crude prices are helping to limit the inflation risks that can send investors flocking to gold as a hedge. And, global investors are feeling less defensive after a Band-Aid fix for Greece. Gold is flirting with a dip below the psychologically significant line of $1,100 an ounce; mining stocks are lower, too. Grain futures are all broadly lower.



Crude futures are flirting with $50 a barrel again. West Texas Intermediate (WTI) crude prices shaved some 3% in just the past week, dropping more than 14% to date in July. London-traded Brent fell nearly 3% last week and more than 10% for the month. Data source: NYMEX. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Crude is Sub-$50. For the first time since April, U.S.-traded crude oil prices dipped below $50 a barrel before finishing Monday near that level (figure 1). Crude was driven there in part by data showing Saudi Arabian exports dropped to their lowest in five months despite record output. Global oil consumption is rising with improving economic growth but not at a pace that most industry analysts believe is brisk enough to suck up all the extra oil lying around.  

IBM: Unlucky 13. IBM (IBM) shares fell after hours and early Tuesday after Big Blue in a late-Monday earnings report logged a 13th straight quarter for declining revenue. Revenue fell 13% to $20.81 billion in Q2. IBM posted a profit of $3.45 billion, or $3.50 a share, in the quarter, which was down 17% from the year-earlier comparable.

Earnings Roundup. Harley-Davidson (HOG) beat Street estimates with both top and bottom lines. Travelers (TRV) logged a profit beat after fewer catastrophic losses. United Technologies (UTX) warned for earnings. Apple (AAPL) is up with its fiscal Q3 earnings after Tuesday’s closing bell. The Street looks for $1.81 a share in earnings, up from $1.28 a year earlier. Also due to report after hours Tuesday are MSFT, YHOO, CMG, GPRO. Notable: MSFT is trading in its 73rd percentile in terms of volatility.

 Good trading,


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