Earnings Spark Rally on Wall Street, Apple Shoots Up 7%

Bikram Pandey
24 Apr, 2012
New York City

U.S. stocks advanced after AT&T, 3M, United Technology and Parker Hannifin, T. Rowe Price and Hershey reported better than expected earnings. After the close, Apple reported $39.2 billion in sales and earnings of $11.6 billion of $12.30 a share.

[R]5:05 PM New York – U.S. stocks advanced after AT&T, 3M, United Technology and Parker Hannifin, T. Rowe Price and Hershey reported better than expected earnings. After the close, Apple reported $39.2 billion in sales and earnings of $11.6 billion of $12.30 a share. Two separate reports indicated diverging views on the housing market.[/R]

U.S. indexes closed higher but the tech heavy Nasdaq fell on the earnings jitters of Apple Inc. Earnings drove the market sentiment and a number of companies reported better than expected earnings.

In economic news, U.S. metropolitan home prices rose February but market stabilization is tentative and the government said single family home sales dropped to their lowest level in four months but sales in the previous three months were revised higher. Also, a separate private report suggested U.S. consumer confidence fell slightly in April.

In the earnings news, 3M first quarter net increased 4% to $1.12 billion. AT&T first quarter net increased 5.2% to $3.58 billion. Coach third quarter net soared 21% as China sales grew 60%.

Apple Inc reported after the close quarterly revenues increased to $39.2 billion compared to $24.7 billion and net profit surged to $11.6 billion from $6 billion or $12.30 a share from $6.40 a share.

Gross margins increased to 47.1% from 41% and international sales were 64% of total sales. In the quarter Apple sold 35.1 million iPhones, 88% increase in the unit sales and iPad sales soared 151% to 11.8 million. However, iPod sales declined 15% to 7.7 million in the period.

Facebook first quarter net declined 12% to $205 million. Illinois Tool first quarter net declined 22% to $486 million.

AT&T gained after the release of earnings and said it sold 3.3 million fewer iPhones in its first quarter compared to a quarter ago. The few sales of popular gadget added to market jitters in the tech sector ahead of Apple earnings after the close.

Big Lots, the fast growing discount retailer plunged 25% after it announced a surprise same store sales decline of 3.6% compared to its earlier estimate of an increase between 2% and 4%. The company said consumable, once its fastest growing category suffered in the quarter and dragged the overall sales growth.

The European indexes rebounded after debt auctions by Spain, Italy and the Netherlands. French sentiment improved in April. The UK public sector net borrowing rose in March. Shell agreed to buy Cove for £1.12 billion.

French confidence improved in April and the index was the highest since November 2010. UK public borrowing rose in March as the government struggles with revenues and fees.

Stocks in Tokyo extended losses for the fourth day in a row and the yen strengthened. All Nippon Airways surged after the airline plans to double its annual dividend per share to 4 yen. Shinko Electric Industries lowered its annual loss estimate.

Australian consumer price index increased less than expected 0.1% in the quarter to March and rose 1.6% in the year to the month. The weak reported inflation followed the benign wholesale price index data released on Monday. Newcrest Mining lowered its annual production outlook and Seven West cut down its operating earnings estimate.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond increased to 1.96% and 30-year U.S. bond edged higher to 3.12%.

The U.S. dollar gained a fraction to $1.318 to one euro and inched higher against the Japanese yen to 81.30 yen.

Immediate delivery futures of Texas crude oil decreased 86 cents to $103.02 a barrel and Brent crude futures fell 15 cents to $118.61.

In New York trading, futures of natural gas decreased 0.02 cents to $1.97 per mbtu and traded near a decade low and gasoline price fell 2.8 cents to 315.86 cents a gallon.

In metals trading, copper gained 4.5 cents to $3.67 per pound, gold added $9.00 to $1,638.90 per ounce and silver increased 22 cents to $30.81.