US markets rebound to continue? Two-sided market returns, Apple earnings
19:00, 19 October 2014
· By CMC Markets
Having rebounded fiercely off the lows at the end of last week, US markets look set to continue their upwards motion ahead of a big week for corporate earnings which sees 128 S&P 500 companies reporting performance during Q3 and including Apple after today’s close.
Dow Jones will open 48 points higher at 16,428 with the
S&P 500 expected to open 5 points higher at 1,891 and the
Nasdaq 12 points higher at 3,827.
There are nine days to go until the US Federal Reserve is expected to end quantitative easing. The era of free money is coming to a close so markets are no longer a one-way bet.
The dramatic moves that were seen in markets last week were both to the up-and downside are an indication that investors are now willing to play either on the long or the short side. This is a positive thing for a functioning market to have both buyers and sellers but because markets have been dominated by one single large buyer (The Fed) for so long, markets have become dislocated.
Corporate earnings will be key to whether the dislocation and resulting high valuations caused by the Fed can be justified.
Apple, having just revealed it will release the iPad Air 2 in time for the Christmas holidays is set to report earnings today after the close. The company started some investor-friendly measures back in June with a 7-for-1 stock split and share buyback which has helped shares rally to a new post-split all-time high above $100.
Activist investor Carl Icahn has been pushing for another buyback but the company’s official statement response suggests it’s probably not likely this time. Having come through “bend-gate” relatively unscathed; focus will be on iPhone sales and whether they can offset declining iPad sales as well as any comments from CEO Tim Cook on taking market share from the likes of embattled rival Samsung.
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