Image source: Getty Images.
Stocks barely budged on Wednesday despite an interest rate announcement by the Federal Reserve and a flood of fresh earnings reports. Through all of that, the Dow Jones Industrial Average (^DJI 0.67%) and the S&P 500 (^GSPC 0.87%) indexes each finished only marginally higher.
Today's stock market:
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
0.14% |
26.85 |
|
S&P 500 |
0.03% |
0.68 |
Data source: Yahoo! Finance.
Financial stocks and gold stocks saw elevated investor attention on a day when the Federal Reserve decided to keep long-term interest rates unchanged. Neither group broke far away from broader market averages, though, and both the Financial Sector SPDR Select ETF (XLF 1.21%) and the leveraged Direxion Daily Gold Miners Bull 3X ETF (NUGT -8.96%) were essentially unchanged.
On the other hand, earnings season produced large price swings in a few individual stocks, including Apple (AAPL 0.51%) and Pitney Bowes (PBI 5.26%).
Apple returns to growth
Apple shares soared 7% to lead the Dow higher after the company demonstrated that its growth days are far from over. Revenue rose 3% following three consecutive quarters of declines on strong demand for its latest iPhone models. Average selling prices jumped thanks to a clear preference on the part of consumers for the larger iPhone 7 Plus, and that success helped the company trounce its earnings guidance.
The tech titan generated $3.36 per share of profit compared to expectations of $3.17 per share. "We're thrilled to report that our holiday quarter results generated Apple's highest quarterly revenue ever, and broke multiple records along the way," CEO Tim Cook said in a press release.
iPhone 7 Plus. Image source: Apple.
Cook and his team drew attention to the company's booming services business that includes iTunes and App Store purchases. The segment passed $25 billion of revenue over the prior 12 months and is now responsible for nearly 10% of overall sales. This quarter's gain was just below 20%, which suggests Apple has a good shot at doubling services revenue by fiscal 2020.
In the meantime, the company guided toward another quarter of iPhone-led growth ahead, as revenue should come in at $52.5 billion while gross profit margin holds steady at just below 40% of sales.
Pitney Bowes misses expectations
Pitney Bowes slumped 18% following surprisingly weak quarterly results. The office services specialist reported a 5% sales decline as it produced adjusted earnings of $0.53 per share. Both the top- and bottom-line figures were significantly lower than Wall Street and management had forecast.
"Our fourth quarter and full-year results were not what we wanted or expected," CEO Marc Lautenbach said in a press release. Executives were especially disappointed with their performance in the software solutions business, which saw a 7% sales decline and a 16% drop in operating earnings. The miss helped push revenue down by 4% for the full year so that Pitney Bowes came in below the lowered outlook it announced in early November.
Looking ahead, management believes it has put most of the sales disruptions, and a good portion of its restructuring charges, behind it. However, Lautenbach and his team sounded a similar tone three months ago when they pulled back their 2016 outlook after an especially weak third quarter. Investors aren't keen to give the company much slack after two consecutive outings headlined by disappointing operating results, so the stock took a justifiable beating on Wednesday.
