The stock market got off to a strong start on Wednesday, although its largest gains at the beginning of the session gave way to nervousness about the imminent decision from the Federal Reserve's monetary policy body over the future course of interest rates. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.62%) was up 64 points to 26,657. The S&P 500 (^GSPC -1.72%) gained 4 points to 2,949, and the Nasdaq Composite (^IXIC -1.80%) was higher by 33 points to 8,128.
Earnings season continued to dominate headlines, and Apple (AAPL -1.51%) gave investors a big boost after announcing its first-quarter results late Tuesday, sending the tech giant back to a $1 trillion valuation. Elsewhere among stocks in the Dow, CVS Health (CVS -1.48%) issued its own quarterly report, and investors were generally pleased with the progress that the drugstore chain has made in expanding its reach to become a comprehensive player in healthcare.
Apple gets it right
Shares of Apple climbed almost 7% as investors worked their way through the implications of the iPhone maker's latest results. Given its disappointing performance last quarter, Apple shareholders wanted clear signs of a recovery from the company.
At first glance, Apple's results might have seemed discouraging, with the company reporting a 5% drop in quarterly revenue that sent earnings per share down by 10%. The key iPhone segment saw even more dramatic declines, with sales falling 17% year over year. Meanwhile, Mac sales were also down, falling 5% from year-ago levels.
However, investors seemed ready to see the glass as being half full for Apple. CEO Tim Cook said that iPhone trends toward the end of the quarter were more favorable than they were early in the period. In addition, sales of iPads were up 22%, and Apple scored a 30% rise in revenue from wearables and other accessories. Shareholders also got rewarded with a 5% dividend hike and $75 billion more in planned stock repurchases.
Perhaps most importantly, Apple's services business continued to grow, with segment sales of $11.5 billion rising 16% and remaining the company's second-most important source of revenue. With the tech giant having only begun to tap the full potential of its ecosystem, investor enthusiasm about Apple's prospects is easy to understand.
CVS gets a clean bill of health
Shares of CVS Health also saw solid gains, rising 5% following the release of its first-quarter financial report. A huge revenue increase of 35% from year-ago levels helped boost net income by 43%, and adjusted earnings came in stronger than most investors had predicted.
The biggest contributor to CVS Health's growth was the acquisition of health insurer Aetna, which made up almost 30% of the combined company's total revenue for the period. The move helped reverse previous operating losses for the CVS healthcare benefits segment, and favorable loss development from the healthcare giant's 22.8 million members also gave a lift to CVS overall.
CEO Larry Merlo noted the importance of Aetna's addition to CVS' results, but he also called out innovations like its HealthHUB concept as adding to the drugstore chain's growth potential. Solid gains in the pharmacy services segment helped boost the top line as well, although profit came under pressure from falling drug prices and reimbursement issues.
Looking ahead, CVS said it now expects full-year adjusted earnings to come in between $6.75 and $6.90 per share, as much as 1% higher from its previous guidance range. With so many drivers of future growth, CVS looks like its strategy has finally started to pay off in its pursuit of long-term success.