Trading in Apple Inc. in the premarket continues to suggest a nasty 10 per cent or so plunge in its share price at the 9:30 a.m. (ET) open.
The stock's woes this morning reverberate far beyond just the iPhone maker; Apple accounts for about 10 per cent of the Nasdaq composite index and 3.6 per cent of the S&P 500. Not surprisingly, futures on both those indexes are in the red, with the Nasdaq down a hefty 1.4 per cent. The TSX shouldn't see much impact, and appears set for a relatively flat open.
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 will be absorbing once again a slew of U.S. earnings reports, which we detail below in our stocks to watch section. 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.
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.
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.
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.
Now, here's a closer look at what's going on this morning and what's to come:
U.S. futures: S&P 500 -0.2 per cent; Dow 0.0 per cent; Nasdaq -1.4 per cent
Hong Kong's Hang Seng index -0.15 per cent
Shanghai composite index -0.77 per cent
Japan's Nikkei +1.28 per cent
London’s FTSE 100 +0.26 per cent
Germany’s DAX -0.20 per cent
France's CAC 40 +0.05 per cent
WTI (Nymex Mar) +0.20 per cent at $95.44 (U.S.) a barrel
Gold (Comex Feb) -0.56 per cent at $1,677.30 (U.S.) an ounce
Copper (Comex Mar) -0.23 per cent at $3.68 (U.S.) a pound
Canadian dollar down 0.0016, or 0.17 per cent, at $0.9985 (U.S.)
ECONOMIC INDICATORS TO WATCH:
U.S. initial jobless claims for last week came in at 330,000, a better reading than the 360,000 that was expected and below the previous week's 335,000. It was also a five-year low.
STOCKS TO WATCH:
Apple shares are down 9.6 per cent in the premarket.
Research In Motion Ltd. shares are down more than 3 per cent in the premarket. Worries about smartphone competition sparked by the Apple report may be spilling over into the stock.
Netflix Inc. shares are up 36 per cent in the premarket after a boost in new subscribers led to surprising strong profit last quarter.
Nokia axed its dividend for the first time in 20 years as it reported an unexpected spike in its net cash position.
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.
3M Co. reported a 3.9 per cent rise in quarterly profit, matching expectations. Shares are up 0.4 per cent in premarket.
Other earnings today include: AT&T Inc.; Bristol-Myers Squibb Co.; E*Trade Financial Corp.; Juniper Networks Inc.; Lockheed Martin Corp.; Microsoft Corp.; OpenText Corp.; Raytheon Co.; Samsung Electronics Co. Ltd.; Southwest Airlines Co.; Stanley Black & Decker Inc.; Starbucks Corp.; Union Pacific Corp.; Xerox Corp.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Stock markets have given up on the idea of safety for investors.
Five reasons to remain cautious on U.S. equities.
Apple Inc. is being outsold in China, the world's largest handset maker, by a company less than 1 per cent its size, highlighting how the lack of low-cost products limits the iPhone-maker in emerging markets.
Many of the metrics that gauge market sentiment are in startling territory.
Fund manager Blackrock's top 3 dividend stocks.
Why iPhone fans should fear Google's earnings report.
David Einborn's hedge fund Greenlight Capital put in a woeful performance last year.
Is the current market rally a matter of dumb investors buying high?
Stock investors and bond investors both use the word "yield" with very different meanings. What investors should know.
The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities
- S&P/TSX Composite$12.76K-10.51(-0.08%)
- Dow Jones Industrials$16.20K-211.61(-1.29%)
- NASDAQ NMS COMPOSITE INDEX$4.36K-146.42(-3.25%)
- US Dollar / Japanese Yen FX Spot Rate$117.11+0.24(+0.21%)
- Apple Inc$94.02-2.58(-2.67%)
- Nokia Corporation$5.96-0.28(-4.49%)
- Agrium Inc$119.84-0.05(-0.04%)
- Canadian Dollar / US Dollar FX Spot Rate$0.72+0.00(+0.14%)
- Netflix Inc$82.79-6.92(-7.71%)
- 3M Co$153.47+0.03(+0.02%)
- Updated February 5 4:00 PM EST. Delayed by at least 15 minutes.