T3’s Take 3: Apple Hulk-Smashes the Bears

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By Michael Comeau

1) Apple Wins, Bears Cry

As I wrote yesterday, expectations appeared to be very low heading into Apple's (AAPL) Tuessday night earnings report.

The numbers confirmed that suspicion as Apple reported better-than-expected revenues, earnings, and iPhone unit sales.

The company also delivered very strong revenue guidance, which indicates that iPhone sales are holding up much better than the bears have expected.

Apple shares ripped 6.6% to $103.03 today, helping to push the Nasdaq Composite and Nasdaq 100 indices to within striking distance of all-time highs.

And let's give Warren Buffett some credit — he disclosed his stake in Apple in mid-May when Apple hit its 2016 low.

2) The Bull Returns… Sort of

Equity markets were a little odd today.

Apple set off a rally in the Nasdaq and the widely-watched biotechnology was very strong, but the S&P 500 barely budged.

The index fell -0.1% to 2066.58 — not exactly a barnburner!

Oil prices and energy stocks slumped on higher-than-expected oil inventories, and we also saw weakness in utilities, real estate, consumer staples, and transports.

Overall, the action felt like run-of-the-mill digestion, though with a clearly bullish tinge.

If biotech makes another run like this tomorrow, we could see the S&P hitting new highs and the Nasdaq finally making its own new record.

3) Fed Schmed

As expected, the Fed left rates unchanged today and issued a somewhat hawkish statement.

The Fed said that employment data points to an increase in labor utilization, and that near-term risks to the economic outlook have diminished.

Initially, gold fell and the dollar spiked, which are consistent with a more hawkish Fed.

However, almost immediately, those moves reversed themselves and gold ended up 1.6% higher at $1,349/oz at the equity market close. And the dollar ended up at daily lows.

Presumably, traders still believe the Fed will move very slowly as Fed Funds futures indicate that the next rate hike won't happen until well into 2017.