US markets to open mixed after Disney disappoints. Apple in focus
US markets are expected to open mixed on Wednesday with Walt Disney shares likely to drag the Dow Jones Industrial Average lower after missing revenue estimates. The sharp declines in Apple shares as well as strong hints of a September rate hike from the Fed’s Lockhart are weighing on general market sentiment.
Apple has dropped sharply over the past two days, falling below its 200 day moving average. Apple is one of the top positions for many institutional investors so after only a 10% correction, the inclination for fund managers could be to add to holdings. There’s a good chance Apple shares could get a big short-covering rally in the next day or two, which would be a good thing for broader market sentiment. Any short-term bounce could however be limited. The drop in the share price will have shaken out investors that were late to the Apple party. Until the release of the next iPhone model, concerns could grow over the impact of slowing demand inside China for Apple’s premium devices.
Disney shares are expected to open as much as 5% lower on Wednesday despite the media giant beating earnings estimates for the 11th consecutive quarter, after revenues came in below consensus. In a roundabout way the Disney blamed the strong dollar for the lost revenue, but phrased it as a weak euro which translated to weaker revenues at Disneyland Paris. Disney also lowered guidance in its cable TV division with ESPN under pressure from lower cable subscriptions.
Tesla reports quarterly earnings after Wednesday’s close. Tesla has beaten delivery estimates for its electric cars in the current quarter so with the Model X added to the production mix in Q4, there is a good chance it could raise guidance for full-year deliveries and thus revenues.
Time Warner, Priceline, Discovery Communications, DISH Network, Ralph Lauren and Fitbit are some of the most prominent companies reporting quarterly earnings on Wednesday.
The ADP unemployment report is expected to see a slight decline in the number of private sector jobs in July of 210K, down from 237K in June. The ISM non-manufacturing PMI is expected to rise slightly to 56.2 from 56.0.
Futures suggest the:
S&P 500 will open 1 point higher at 2,094 with the
Dow Jones expected to open 18 points lower at 17,532 and the
Nasdaq 100 4 points higher at 4,571.
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