Morning Minutes

Apple and Amazon Misses Sink Stocks, Resource Giants Beat The Street



Yesterday’s US market rally came to an abrupt end overnight. Index futures are reeling from a one-two punch of two heavyweights reporting disappointing earnings after the close yesterday. NASDAQ futures are currently down 0.9%, while S&P futures are down about 0.5%. European markets are also struggling today with the Dax down 0.8% and the FTSE down 0.4%.

Apple is down 3.5% in premarket trading today after posting in-line EPS of $1.24 and missing on sales ($83.36B vs street $84.85B). Management noted supply chain problems cost the company $6B in Q3 and are expected to get worse in Q4, particularly chip shortages., meanwhile, is down 4.5% premarket after missing expectations badly both on EPS ($6.12 vs street $8.92), and on sales ($110.8B vs street $111.6B) and also disappointed on Q4 sales guidance ($130B-$140B vs street $142.1B). Management blamed consumers shifting some purchases back to physical stores, supply chain problems and rising costs, particularly wages and shipping, for the shortfalls. Starbucks is also under pressure this morning, falling 5.7% premarket, after missing expectations on sales ($8.1B vs street $8.2B) as same store sales in China plunged 7% instead of staying flat which was expected.   

There were several positive earnings reports out of the US as well overnight and this morning. In particular, rising commodity prices boosted results from energy and materials giants, including Chevron ($2.96 vs street $2.21), Exxon Mobil ($1.58 vs street $1.56), and US Steel ($5.36 vs street $4.85, up 8.2% premarket.  

Crude oil is bouncing back from yesterday’s correction with WTI and Brent both up about 0.4%. OPEC+ reduced its market balance outlook to a shortfall of 0.3 mmbbl/d in the near term from its previous forecast deficit of 1.1 mmbbl/d. This has reduced pressure on the alliance to accelerate production restoration beyond the current 0.4 mmbbl/b per month. Algeria has indicated it is opposed to any further increases at next week’s OPEC+ meeting. Natural gas remains under pressure, however, falling another 1.5%. Metals are mixed with copper up 0.1% and gold down 0.4%.   

The stagflation story shifted to Canada today. Monthly GDP growth for August (0.4% % vs street 0.7%) was weaker than expected. Meanwhile industrial product prices (1.0% vs street 0.5%) and raw material prices (2.5% vs street 0.1%) for September were much higher than expected showing inflation pressures building. US personal income was worse than expected (-1.0% vs street -0.2%) while personal spending beat expectations (0.6% vs street 0.5%). US Core PCE inflation, a measure the Fed likes to use, showed inflation pressures easing slightly in September (3.6% vs street 3.7%). US Chicago PMI is due at 9:45 am EDT (street 63.5 vs previous 64.7).  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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