Financial News Report April 24th

On the last week the three main major indexes moved with the same trend. Nasdaq, Dow Jones Industrial Average and S&P 500 presented gains from Wednesday to Wednesday (April 16- April 23, considering that Markets were closed on Friday 18^th). The best day for the three indexes was on Tuesday 22^nd and yesterday was the only day showing losses.

Nasdaq had a weekly change of +1.47% with a negative performance on yesterday of -34.49(-0.83%). Dow Jones Industrial Average had a weekly change of +0.81% with a negative performance on yesterday of -12.72(-0.08%). Finally, S&P 500 had a weekly change of +1.14% with a negative performance on yesterday of -4.16 (-0.22%).

On April 23^rd, the four big “market movers” stocks were: Facebook, Amazon, Netflix and Apple:

•       Amazon (AMZN): 324.58 (-4.74, -1.44%)

•       Apple (AAPL): 524.75 (-6.95, -1.31%)

•       Facebook (FB): 61.36 (-1.67, -2.65%)

•       Netflix (NFLX): 353.5 (-19.4, -5.2%)

*The four of them showed losses and Amazon, Apple and Facebook were rebounding on the afterhours.

Facebook decreased in advance to the quarterly earnings report, which was revealed in the afterhours. Analysts say that the stock was traded at a “premium value”. But the report revealed a first quarter-adjusted profit of 34 cents a share of revenue of $2.5 billions, overcoming the expectations of 24 cents a share of revenue of $2.36 billions. They also reported that the Vice President of corporate finance will replace the CFO of the company. Finally they revealed that their monthly active users grew by 15%, while their everyday users, who represent their advertisements consumers, grew by 21%.

Amazon announced a deal with Warner regarding the HBO series licensing. This represents a threat for Netflix and Apple. The deal would make Amazon the exclusive online-only subscription home for some HBO shows and allow them to offer more than 70 original series with multiple seasons while Netflix offers less than 10 series with incomplete seasons. Moreover, Netflix crushed its earnings and revenues on Monday’s quarterly report.

However Amazon’s decrease it’s explained by their tax problem. As an online retailer, they had no state or sales taxes, having a bigger advantage on traditional retailers. But some states are adopting new laws only affecting Amazon to make them collect sales taxes and regular competition. An empirical study made by the Ohio University showed that sales in the states where the law was implemented decreased by 9.5%.

Apple’s first quarter results exceeded the expectations, generating the biggest post-earnings rebound since 2012’s first quarter. In the afterhours, the stock price increased more than 7% reaching 2014 highs at $566. 

Three main announcements surprised the investors:

•       Increase stock buyback from 60 to 90 billions

–      CEO commented that this shows how much confidence they have on the company.  He thinks the stock is undervalued.

•       Set 7-for-1 stock split effective June 9^th

•       Boost overall size of capital return program from 100 to more than 130 billions by the end of 2015.

–      Through dividends and buybacks

The 7-for-1 stock split makes the stock more attractive and affordable for investors. Regarding yesterday’s close at $525 the stock price would drop to $75 a share. This will be Apple’s first split in nine years, paying the way to be included in the Dow Jones Industrial Average.

	Q1 2013	Q1 2014	% Increase	Analyst estimated
Earnings per Share	$10.09	$11.62	15%	$10.18
Revenue	$43.60 B	$45.60 B	5%	$43.53
Net Income	$9.55 B	$10.22 B	7%

	Units Sold	Analyst estimated
IPhone	43.7 M	38.2 M

Regarding Gold, its price fell to the lowest in ten weeks on April 22^nd. Although the conflict in Ukraine generates support for the price of Gold, the FED announced that they might raise Interest Rates after ending debt purchases this year while US Economy recovers (making demand decrease for Gold). On other news, Barclays announced that they will exit worldwide commodities activities, joining JP Morgan Chase and Morgan Stanley strategy, due to the decrease in their revenues and volatility that commodities have been performing during this year. Furthermore, the World Gold Council revealed its forecast of China’s flat demand for Gold for this year.  

Links:

http://www.marketwatch.com/story/will-china-drop-gold-next-2014-04-22?pagenumber=2

http://online.wsj.com/news/articles/SB10001424052702304279904579517410107973306?KEYWORDS=gold&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304279904579517410107973306.html%3FKEYWORDS%3Dgold&fpid=2,7,121,122,201,401,641,1009

By Tomas Clark and Lucas Gorosabel