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T3's Take 3: Apple, Twitter, and Gilead Drop Earnings on the Market's Head


Today's financial recap and tomorrow's financial outlook.

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The Big 3 Report

Apple (AAPL)which is the largest component in the S&P 500 and NASDAQ, reported earnings after the bell on Thursday.

Apple beat analysts sales and revenue expectations, but reported iPhone and iPad unit sales numbers that were slightly below Wall Street estimates. Guidance for next quarter was slightly below expectations, which is not unusual for Apple, which typically offers conservative guidance.

Apple shares rose 4.1% to $119.28 today.

Twitter (TWTR)  shares sold off aggressively today after reporting its own earnings. Twitter beat revenue and earnings expectations, which was not a surprise given that the company recently reaffirmed its third-quarter guidance.

However, the company also reported weak user growth and fourth-quarter guidance, which took investors by surprise given the positive guidance announcement.

Twitter dropped as low as  $27.05 after the report, but firmed up to finish at $30.87, down just 1.5% on the day.

Biotech heavyweight Gilead (GILD) blew away analysts' expectations. The company reported Q3 EPS of $3.22, smashing the consensus of $2.88. The company also raised guidance.

However, shares sold off due to weakness in sales of certain drugs, and the stock finished down 2.6%.

FOMC Rate Decision

The Fed kept its interest rate policy unchanged today.

This was not a surprise. According to Fed fund futures, the market was pricing in a 4% probability that the Fed would announce an interest rate hike today.

However, the Fed took a slightly hawkish turn in its release. The Fed removed the line "global developments may restrain growth," which indicates that the Fed is less concerned about the global economy.

As a result, it now appears more likely that a Fed rate hiks is on the table in December.

The Fed also said it expects inflation to return to 2% in the medium term, and that the US economy is expanding at a moderate pace.

Market Action

US stocks rallied on Apple's earnings report.

Then, they backed off a bit after the Fed's rate decision announcement before skyrocketing into the close.

Small caps showed significant relative strength, with the Russell 2000 rising 2.9% vs. the S&P 500's 1.2% gain.

The S&P 500 finished at 2090.33, putting it within striking distance of the 2134.72 all-time high.

Energy stocks stood out to the upside today as crude oil rose over 6%.

Thursday's Financial Outlook

Tomorrow will be a busy day with economic data.

In the US, we have jobless claims, GDP, PCE, Bloomberg consumer comfort, and pending home sales numbers on tap.

Overseas, the big reports people will be watching are Germany's employment and CPI reports, and the Bank of Japan's rise in monetary base.

Thursday will be another busy earnings day, with Aetna (AET), AmerisourceBergen (ABC), ConocoPhillips (COP), Mastercard (MA), Sony (SNE), Time Warner Cable (TWC) reporting before the open. (BIDU), Banco Santander (SAN), and Starbucks (SBUX) report after the close.
No positions in stocks mentioned.
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