On Wednesday, Apple Inc.’s (NASDAQ:AAPL) quarterly miss dominated trading on the Dow Jones Industrial Average. Despite a gain of 4.7% by Dow member Boeing Co (NYSE:BA), the senior index gained just 0.17%, influenced by Apple’s loss of 2.3%.
After the close on Tuesday, Apple reported its first annual revenue decline in 15 years. According to FactSet, the company is the biggest drag on the S&P 500 tech sector’s Q3 earnings growth.
In addition to Apple’s decline, soft crude oil prices for the third consecutive day cast a shadow over the equity markets. The U.S. Energy Information Administration report indicated that crude stockpiles fell more than anticipated, but not far enough to push OPEC into reaching a consensus over cuts in production. WTI crude fell to $49.18 per barrel, down 1.6%.
Seven of the eleven S&P sectors closed lower yesterday, with Real estate leading lower at -1.3%, health care off 0.07% and technology down 0.05%. Financials, industrials and energy finished with gains of 0.6%, 0.4% and 0.3%, respectively.
At the close the Dow Jones Industrial Average rose 30 points at 18,199, the S&P 500 fell 4 points to 2,139, the Nasdaq lost 33 at 5,250 and the Russell 2000 closed at 1,205 for a loss of 11 points. The NYSE’s primary exchange traded 886 million crossing at a total of 3.7 billion shares. The Nasdaq traded 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.8-to-1, and on the Nasdaq, decliners led by 2.2-to-1. Blocks on the NYSE rose to 5,717 from 5,202.
The chart of the exchange-traded fund SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) looks toppy, but volume is light. MACD is slightly negative, slipping just below the horizontal line. If the support line at 275 gives way, look for a break to the 200-day moving average at 266 or the June low at 257.
Conclusion: Stocks don’t rise forever. Since we’ve had just one true correction of over 10% (January’s 18%-plus), it would not disturb the long- and intermediate-uptrend if we had a mild correction of 10% to 12%. Targets, following a break of the support line for the MDY at 275 are, as noted above, the June lows.
It is time to prepare by taking profits on over-extended winners and cutting losses on losers. And prepare a list of stocks that you would like to own at reasonably lower prices.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
