What Is Apple Hiding?
On Tuesday, Apple Inc. (AAPL, -4.49%) released its earnings results, yet no information was provided around the sales numbers of the recently launched Apple Watch. While Apple stated that this was done intentionally in order to hurt its competitors, it seems that the only one hurting is Apple’s stock. By not providing any information around their Apple Watch, which represents the company’s first new product category since the launch of the iPad, Apple stocks declined even after the tech giant reported better than expected revenue and profit results. Based on the data released on Tuesday, it is not possible to assess how well Apple’s smartphone performed in terms of sales. Interestingly, Apple did provide sales numbers on Apple TV, iPods and other devices. According to a FactSet survey, analysts had forecast that Apple Watch sales had missed expectations and that the ‘Other’ category, which includes the smartwatch, only grew by less than $1 billion, both year over year as well as sequentially. According to analysts’ forecasts, on average, Apple collected more than $1.8 billion from initial sales of the smartwatch. Also, Gene Munster, an analyst from Piper Jaffray wrote that he estimates that Apple only sold approximately 1.2 million devices which is far lower that the projection of 3 million units and even lower than the consensus expectation of 4 million. So what exactly is Apple hiding and how many Apple Watch units do you think the tech company has sold since its launch in March this year?
On Wednesday, U.S. stocks traded lower. This came as a result of the disappointing results from Microsoft Corp. (MSFT, -3.68%) and Apple Inc. (AAPL, -4.23%), while a selloff in technology stocks and a decline in oil prices, also negatively impacted stock prices. At the close of trading, the Nasdaq Composite index (COMP) declined 0.7%, or 36.35 points, to 5,165. This was prompted by a drop in the tech heavy index’s heaviest-weighted stock as Apple tumbled 4.2%. Interestingly, Apple was also responsible for taking off 3.6 points from the S&P 500 index (SPX) which ended the traded session 0.2%, or 5 points, lower at 2,114.15. Losses were led by the technology sector which declined 1.6 percent while 5 out of the index’s 10 sectors finished with losses. Meanwhile, the Dow Jones Industrial Average (DJIA) was also on the downside and the blue chip index dropped 0.4%, or 68.25 points, to 17,851.04. The decline in the Apple share price was responsible for a drop of 36 points on the Dow index.
On Wednesday, the U.S. dollar (USD) traded higher. This came in response to data which showed that in June, existing home sales in the U.S. hit their highest level since 2007 and this positive data prompted expectations that the Federal Reserve is likely to increase interest rates within the next few months. According to the National Association of Realtors, for the month of June, existing home sales in the country increased to 5.49 million units, up 3.2% compared to 5.32 million units in May. This beat analysts’ expectations for home sales to rise to 5.40 million units in June, up 1.2%. The EUR/USD traded at 1.0886, down 0.44% while the GBP/USD traded at 1.5619, up 0.41 percent. Against the Australian and Canadian dollars, the Swiss franc and the Japanese yen, the U.S. dollar traded higher with the AUD/USD down 0.77% at 0.736, the NZD/USD down 0.95% to 0.6560, the USD/CHF up 0.41% to 0.9625 and with USD/JPY up 0.17% and trading at 124.10. Also, the U.S. dollar index was at 97.84, up 0.43%.
In Asian trading on Wednesday, crude oil prices declined with U.S. prices settling below $50 a barrel for the first time since April. This came in response to the weekly report by the EIA (Energy Information Administration) which showed an increase in crude supplies for the week ending on the 17th of July of 2.5 million barrels. This missed analysts’ expectations for a decrease of 1.9 million barrels. WTI crude oil for delivery in September traded at $49.19 a barrel, down 3.3%, or $1.67, on the NYMEX. Also, Brent crude oil for delivery in September traded at $56.13 a barrel, down 1.6%, or 91 cents, on London’s ICE Futures exchange.