We saw more defensive action in the stock market today, with all three major moving averages tiptoeing lower. That comes with the Fed’s midday announcement on Wednesday and as President Trump complained on Twitter about China’s poor faith trade-negotiation tendencies.
On Monday, we said it wouldn’t be too surprising to see this type of defensive action given the busy week. Bonds, gold, the VIX and others were again on the move higher Tuesday. Perhaps a bit surprising was the rally we saw in the Russell, with the iShares Russell 2000 ETF (NYSEARCA:IWM) rallying 1.79%.
To be clear, it’s not as if the SPDR S&P 500 ETF (NYSEARCA:SPY) or the PowerShares QQQ ETF (NASDAQ:QQQ) were hammered, each falling just 0.25% and 0.43%.
However, those indices could be moving largely in one direction following earnings from one of the market’s largest companies: Apple (NASDAQ:AAPL).
Earnings and Fed to Come
Apple reports quarterly results after the close on Tuesday. AAPL stock has been doing pretty well as of late, slowly but surely grinding its way higher. It’s almost back to its post-earnings levels from last quarter. This leaves investors in a tough spot, as they try to determine how the stock will trade in what is typically Apple’s slowest quarter.
Most investors will be focused on what Apple management sees going into the second half of the year and how the situation in China is impacting both revenue and earnings.
Analysts keep issuing bullish reports on Apple, pointing out that Street estimates seem too low. That’s ironic, because as these reports surface, it seemingly elevates expectations. So we’ll see how Apple does in a few hours.
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Consensus estimates call for earnings of $2.10 per share on revenue of $53.4 billion. That $2.10 EPS estimates has been steady for the past couple of months and has increased slightly from $2.07 90 days ago. For revenue, it’s about at the midpoint of management’s prior outlook, which was for $52.5 billion to $54.5 billion.
Two of the most important metrics will be iPhone revenue and Services revenue. Consensus expectations are calling for $26.31 billion and $11.68 billion in sales, respectively.
The report may also move recent large-cap names involved with Apple, specifically Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM).
Apple’s not the only one reporting, With Advanced Micro Devices (NASDAQ:AMD) set to report after the close too. Analysts expect earnings of 8 cents per share on revenue of $1.52 billion. Q3 sales estimates stand at $1.22 billion, as guidance will be key to the stock’s price action.
As for the Fed, investors are pricing in a 78.1% chance of a 25 basis point cut and a 21.9% chance of a 50 basis point cut. Note: the market is not pricing in a no-cut scenario.
Movers on the Stock Market Today
Beyond Meat (NYSE:BYND) was moving quite a bit Tuesday after reporting earnings. After falling as much as 17.3%, the stock erased almost all of its losses in the first few hours of trading. Those intraday gains couldn’t stick though, with BYND falling 12.3% on Tuesday.
The results come after a better-than-expected revenue figure, but a miss on earnings. Further, the company is offering 3.25 million shares in a secondary. While most would consider that a savvy business move, it rubbed a lot of investors the wrong way when they realized 3 million shares were part of an early lockup expiration, with just 250,000 shares being sold to help the business.
While Procter & Gamble (NYSE:PG) isn’t up almost 700% on the year like BYND, it’s done well. Shares are up over 30% in 2019 and up about 50% over the past 12 months. Tuesday morning’s fiscal Q4 earnings results are only helping to fuel those gains.
The company beat on earnings per share and revenue expectations, but those are small potatoes compared to PG’s other impressive metrics. Organic sales exploded 7%, easily besting expectations of 4% and were the company’s best result in more than 10 years. Further, management plans to buyback $8 billion worth of stock in the coming year. Finally, full-year earnings guidance came in ahead of consensus views and margins increased.
In short, it was a great quarter.
Finally, Capital One Financial (NYSE:COF) was under pressure, falling 5.9% as a late-session rally helped give it a boost. The company disclosed a data breach affecting more than 100 million people throughout the U.S. and Canada.
According to the company, the breach was “perpetrated by a former employee of Amazon Web Services, where the bank had stored its customer data.” COF says it will cost the company $100 million to $150 million and the Senate Banking Committee has already begun its probe.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL.
