Stocks Slide as Gold Surges Ahead of Apple Earnings

Advertisement

Stocks drifted lower on Monday in a relatively quiet session. The action, once again, was over in currencies as the U.S. dollar broke down out of the powerful uptrend that has lifted the greenback since last summer.

As a result, dollar-sensitive precious metals were the day’s big winners. The catalyst seemed to be the marginalization of Greece’s somewhat aggressive and outspoken finance minister as bailout negotiations with the European establishment continues.

A big selloff in biotech was a drag on the rest of the tape.

In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 lost 0.4%, the Nasdaq Composite lost 0.6% and the Russell 2000 lost 1.2%.

04272015-fcx

June gold futures gained 2.4% while July silver futures surged 4.8%. As a result, the ProShares Ultra Silver (NYSEARCA:AGQ) held by Edge subscribers posted an impressive 0.1% gain. Metals stocks were also on the move as the overall materials sector gained 0.9%. Freeport-McMoRan Inc (NYSE:FCX) jumped 4.8% to lift the May $20 FCX calls recommended to Edge Pro subscribers on Thursday to a gain of nearly 140%.

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB), an area of extended valuations and frothy sentiment, dropped 4.2% on merger and acquisition activity. Mylan NV (NASDAQ:MYL) fell 5.7% after rejecting an unsolicited offer from Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), which fell 4.3%.

04272015-aapl

Apple Inc. (NASDAQ:AAPL) gained 1.8% ahead of earnings, lifting our May $128 calls to a gain of 61%. Shares are up another 0.9% in after-hours trading on an earnings beat.

The iPhone slinger earned $2.33 per share versus the $2.15 the Street was expecting on better-than-expected revenues and profit margins. Both iPad and iPhone shipments beat expectations. Apple also increased its capital return program to $200 billion, an increase of 50%, by 2017 via buybacks and dividends.

Looking ahead, all eyes will be on the Federal Reserve’s upcoming policy announcement on Wednesday. Nothing major is expected with no news conference scheduled and no upcoming forthcoming to the Fed’s “dot plot” of economic projections.

But everyone will be looking for an acknowledgement of the recent slowdown in U.S. job growth and the softening of the economy over the first quarter due largely to a severe winter. Commentary surrounding the negative impacts of the dollar’s rise out of last summer’s lows would also be taken as dovish.

The futures market has already pushed back its estimate on the timing of the Fed’s rate liftoff to the end of the year with a rising probability of no action until early 2016. If the Fed plays along,  the dollar could see additional weakness here — lifting gold and silver in a big way.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/04/stocks-slide-as-gold-surges-ahead-of-apple-earnings/.

©2024 InvestorPlace Media, LLC