The Nasdaq opened with a thud, brought down by steep losses in Apple Inc. stock after its quarterly earnings late Wednesday added fuel to growing concerns that the technology superstar is starting to lose some consumer appeal.
Apple accounts for about 10 per cent of the Nasdaq composite index and 3.6 per cent of the S&P 500. So its 11 per cent plunge at the start of trading is weighing on those indexes. The S&P 500 opened nearly unchanged, but the Nasdaq was down 23 points, or 0.7 per cent, at 3,131.
Indexes that don't contain Apple were doing better; the S&P/TSX composite index was up 29 points, or 0.2 per cent, at 12,823. The Dow Jones industrial average was up 36 points or 0.2 per cent, at 13,815.
Apple is being punished after disappointing first-quarter results and guidance late Wednesday that showed the slowest sales growth in 14 quarters. While the headline earnings and revenue figures weren't all that far off Street forecasts, there were a number of other things that spooked investors, including the company's gross margin taking a significant hit. At least 14 brokerages have slashed their price targets on Apple in the wake of the earnings report, with an average cut of $142, according to Reuters. Among them was Topeka Capital's Brian White, who slashed his legendary $1,111 target -- the highest on the Street -- to $888.
More broadly, the market today is absorbing once again a slew of U.S. earnings reports. It has been a strong season so far, supporting the S&P 500 index's nearly daily march to fresh five-year highs. Of the 115 S&P 500 companies that released results so far, 77 per cent beat profit projections, according to Bloomberg data.
There was some upbeat economic data out of the U.S. this morning that's helping to boost sentiment. U.S. initial jobless claims for last week came in at a five-year low of 330,000, a better reading than the 360,000 that was expected and below the previous week's 335,000. And Markit's preliminary manufacturing Purchasing Managers Index rose to 56.1 in January, its best showing since March, 2011. It stood at 54.0 last month. A reading above 50 indicates expansion.
Market players will be keeping a nervous eye on North Korea, which announced overnight that it plans a new nuclear test "of a higher level" that would target the United States.
Also overnight in Asia, Japanese stocks snapped their two-day losing streak that was sparked by disappointment that its central bank didn't go far enough in announcing "bold" measures to prop up its economy earlier this week. The Nikkei rallied overnight by 1.2 per cent with the help of the yen weakening against the U.S. dollar. This morning the yen was down 1.1 per cent to 89.61 per U.S. dollar, a helpful move for the economy that is highly dependent on exports.
Chinese stocks were down overnight, even after a purchasing managers' index showed a two-year high in factory growth in that country. It came in at 51.9, well above the 50 per cent that indicates industry expansion.
This is also a notable morning for the loonie, which has fallen below parity with the U.S. dollar for the first time since November. The currency has become less popular in global markets after the Bank of Canada said Wednesday that higher interest rates now are "less imminent" amid sluggish economic growth. It was last trading at 0.9980 per U.S. dollar, down about two-tenths of a cent from Wednesday.
Here's a look at some stocks on the move this morning:
Research In Motion Ltd. shares are down 2.7 per cent. Worries about smartphone competition sparked by the Apple report may be spilling over into the stock.
Netflix Inc. shares surged nearly 40 per cent at the open after a boost in new subscribers led to surprising strong profit last quarter.
Nokia axed its dividend for the first time in 20 years but reported an unexpected spike in its net cash position. Shares are down 8 per cent in New York.
Agrium Inc. raised its fourth-quarter earnings forecast on Thursday, as strong grain and oilseed prices spurred demand for its fertilizer products over the fall season in North America. Shares opened up 3.5 per cent.
3M Co. reported a 3.9 per cent rise in quarterly profit, matching expectations. Shares are up 0.2 per cent.