Markets Recover On Strong Earnings

Markets Recover On Strong Earnings

US stocks gained on Wednesday following a surprisingly strong earnings report from Apple Inc.



Markets Recover On Strong Earnings
Markets Recover On Strong Earnings

Investors were elated with the news and the market rose across the board. The gains were particularly encouraging after Tuesday’s selloff, when stocks had their worst performance in three weeks.

That decline was the result of poor earnings from such companies as Caterpillar and Microsoft. But with Apple’s robust earnings, investors are suddenly optimistic (again), while investors awaited a Federal Reserve decision on interest rates.

The tech-focused Nasdaq gained 1.2% higher on the Apple earning report. The S&P 500 also added 0.6% while the Dow earned 0.3%.

Apple reports big holiday quarter earnings
The ever-popular iPhone notched an increase in Q4 of 2014 that even the most bullish investors could not have predicted, according to The Wall Street Journal. Apple sold 74.5 million iPhones in the holiday quarter – a 46% jump from a year prior, even as the company increased prices by $50 per device.

Apple has often been a good bet for investors, as the company’s revenue has expanded by over tenfold in the last decade.

“We brought on more new people to iPhone than ever before,” Apple CEO Tim Cook told The Wall Street Journal. “Many of those are switching from Android, and we couldn’t be happier about that.”

Fed to release meeting details Wednesday afternoon
Additionally, the Federal Open Market Committee is scheduled to reveal the outcome of its 2-day meeting at 2 PM ET on Wednesday, according to MarketWatch. For the most part, investors expect the statement to remain the same as it has been in recent meetings – an interest rate hike is on the way sooner rather than later. However, some economists speculated that the rate hike won’t occur until later.

Ellen Zentner, economist for Morgan Stanley, said on Tuesday that she didn’t anticipate a rate hike until March 2016. She cited the persistent downward pressure of inflation. Colin Cieszynski, analyst at CMC Markets, echoed Zentner’s sentiment. He told MarketWatch that negativity in the oil sector and related industries have a more immediate impact than the benefits of lower energy costs.

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