U.S. Indexes Decline; Apple Surges 7%

Arthi Gupta
25 Jan, 2012
New York City

The U.S. indexes fell after Boeing issues cautious outlook and tech stocks gained after Apple Inc reported a surge in earnings. U.S. mortgage applications slid last week. Motorola Solutions quarterly net slips and Abbott Labs quarterly sales miss estimates.

[R]9:45 AM New York – The U.S. indexes fell after Boeing issues cautious outlook and tech stocks gained after Apple Inc reported a surge in earnings. U.S. mortgage applications slid last week. Motorola Solutions quarterly net slips and Abbott Labs quarterly sales miss estimates.[/R]

U.S. indexes and European markets edged lower after mixed earnings but tech stocks were in focus after Apple reported a surge in earnings and sales during the holiday period soared on the new phone device.

Investors look ahead to the latest monetary policy decision by the Fed followed by a press conference by Fed Chairman Bernanke after the release of the post-meeting policy statement.

Talks between Greece and international lenders are likely to find a resolution by the end of the week and European leaders may have to accept 50% or more losses in the restructured bonds. So far, the Greek bonds of €55 billion held by the European Central Bank are not part of the restructuring and the central bank is expecting full repayment.

However, as the negotiations between private lenders and troika of international lenders reach a critical stage, the ECB may have to accept losses like all other investors.

At the conclusion of two days meeting of euro zone finance ministers in Brussels, the European Union officials pressed for more growth measures and employment.

The European Union Council said that Hungary has failed to comply with its recommended measures to lower its budget deficit below the target set by the European Union of 3% of Gross Domestic Product.

An auction of Germany''s 30-year bonds today attracted bids of €5.042 billion against the €3 billion offered, Bundesbank said.

The major Asian markets traded higher boosted by Apple''s earnings.

Japan logged a trade deficit of 2.49 trillion yen for 2011, Ministry of Finance data showed. Japan recorded its first annual deficit since 1980 after exports suffered on the supply chain disruptions after the earthquake and imports surged after nuclear power electricity generation fell to the lowest level.

U.S. Mortgage Activity Drops

U.S. mortgage applications fell last week, industry data showed today.

The Mortgage Bankers Associations Market Composite Index declined 5%, reflecting a 5.2% drop in refinancing and a 5.4% decrease in purchase applications.

The 4-week moving average of the market composite rose 4.12%.

Earnings Review

Apple Inc. ((AAPL)), the maker of phones and computer devices said first quarter net sales surged 73% to $46.33 billion from $26.74 billion in the same quarter last year. Net income in the quarter soared 118% to $13.06 billion or $13.87 per diluted share compared to net income of $6 billion or $6.43 per share for the year-ago quarter.

The company sold 37.04 million iPhones in the quarter, a 128% unit growth over the year-ago quarter while iPad sales during the quarter surged 111% to 15.43 million units.

WellPoint, Inc. ((WLP)), the health insurer reported fourth quarter total revenues grew 5% to $15.318 billion from $14.62 billion. Net income for the quarter declined 39% to $335.3 million or 96 cents per diluted share compared to net income of $548.8 or $1.40 per share in the previous year.

For 2011 total operating revenue advanced 4% to $59.865 billion from $57.741 billion. Net income for the year fell 8.3% to $2.647 billion or $7.25 per share compared to net income of $2.887 billion or $6.94 per share in the prior year.

Xerox Corp. ((XRX)), the printer and copier maker reported fourth quarter total revenues dipped 0.2% to $5.964 billion from $5.976 billion in the prior year. Net income for the quarter surged 119% to $375 million or 26 cents per diluted share compared to net income of $171 million or 12 cents per share in the prior year.

Yahoo! Inc. ((YHOO)), the digital media company reported fourth quarter revenue decreased 13% to $1.324 billion from $1.525 billion in the year-ago quarter. Net earnings in the quarter dropped 5% to $295.6 million compared to net earnings of $312 million in the year-ago quarter. Earnings per share were unchanged at $0.24 reflecting lower share count for the quarter.

For the full year, revenue declined 21% to $4.984 billion compared to 6.324 billion from the same period of 2010. The company earned $1.049 billion or $0.82 per share in fiscal year 2011, down from $1.232 billion or $0.90 per share for fiscal year 2010.