The stock market's most iconic indexes, the
Dow Jones Industrial Average
, may have hit a minor speed bump over the past week, but for the
better part of a year now they've been barreling through
psychological barriers one after another.
The primary reasoning behind the stock market's ascent is a
steady improvement in a number of key economic indicators. The
U.S. unemployment rate is essentially near a six-year low,
manufacturing activity is expanding at a brisk pace, and
historically low lending rates are fueling mortgage lending and
Of course, Wall Street and investors are no dummies. The U.S.
economy is inherently cyclical due to a bevy of factors,
including the effects of monetary and fiscal policy on the
economy, meaning there will be another recession in the U.S.'
future at some point.
To that end, Wall Street tends to hone in on some of the
nation's largest companies in order to discover clues about
growth and economic trends that might otherwise be lost in the
release of the government's monthly or quarterly figures.
Between earnings season and the potential for the economy to
hit this inflection point, a number of large-cap stocks are
piquing Wall Street's interest. Here are three companies,
according to Bloomberg, whose Wall Street readership -- i.e.,
analysts' interest in reading news stories on their
ticker-specific feeds -- was among the highest in July.
Should it come as any surprise that the world's largest company
hogged Wall Street's attention?
Apple has suffered a number of corrections throughout the
years when its innovation has been questioned and its future
growth prospects have been skewered from every angle. Yet Apple
continues to foil naysayers with exceptional cash flow, mobile
devices that fly off the shelves, and
that grow every year.
The infatuation with Apple last month likely had to do with
the company's third-quarter earnings release. During the quarter,
Apple reported revenue up $2.1 billion to $37.4 billion year over
year and a quarterly net profit of $7.7 billion, or $1.28 per
share, which represents Apple's highest EPS growth rate in
seven quarters. These results slid well past the $36.2 billion in
sales and $1.23 in EPS that the Street had expected.
iPhone 5c. Source: Apple.
Wall Street has to like what it has heard from Apple on the
innovation front, specifically with regard to the iPhone 6
remaining on track
for a September debut and sporting a number of key features,
including larger displays, improved fingerprint-reading
technology, faster WiFi capability, and a new A8 processor, which
should yield faster processing speeds.
Don't expect Apple to drop out of the top readership spot for
Wall Street firms anytime soon, but for now it's business as
Similar to Apple in the technology sector, Citigroup's
second-quarter earnings results in July were viewed as a
barometer to gauge the health of, and form expectations for, the
remainder of the banking sector. It's no wonder Wall Street was
eager to read about this stock.
For the quarter Citigroup reported that its adjusted revenue
fell 3% from the year-ago period to $19.3 billion, and it
delivered an adjusted profit of $1.24 per share, which trounced
Wall Street's expectations for $1.05 in EPS.
But the banking sector has been about much more than just
profits, losses, loans, and deposits in recent years. Scandals
and settlements have rocked the sector, and Citigroup has found
itself to be front and center in a number of allegations.
During the second quarter, for example, Citigroup announced a
$7 billion mortgage-backed securities
with the government, resulting in a $3.7 billion pre-tax charge
against GAAP earnings. This settlement could be one of a number
of settlements that large banks face in lieu of their actions
during the housing bubble. Rival
Bank of America
is also nearing a settlement with the government that could
be more than twice as large as what Citigroup wound up
Between Citigroup's capital-disbursement rejection, its
disclosure of accounting fraud from a subsidiary in Mexico in
February, and its settlement with the government, Citigroup is
becoming a veritable mill of bad news. For investors this has the
double-edged effect of getting bad news out of the way early
while making Citigroup less predictable than perhaps any other
money center bank.
International Business Machines
Lastly, Wall Street had its keen focus on hardware and software
giant IBM last month. Although IBM's actual results
matter, the implications of its
from hardware to cloud software are more important and serve as a
model for a lot of hardware firms currently undergoing a similar
For the quarter, IBM recorded revenue of $24.4 billion, down
about 2% from the year-ago quarter, while adjusted earnings
jumped an impressive 21%. There were a number of highlights,
including mobile revenue more than doubling and cloud-computing
revenue rising better than 50%.
But the company's existing hardware and software services
business continues to be a drag. Emerging markets could play a
key role in IBM's infrastructure growth, but the past quarter
demonstrated that spending from overseas firms wasn't on par with
From the perspective of Wall Street, this could be a sign that
the static hardware space is overcrowded and/or that IBM is
having a tough time differentiating its product in overseas
markets. On paper IBM shouldn't be having any issues with its
hardware or software services in emerging markets, but its
results suggest otherwise. This could be a sign for Wall Street
and investors to temper their growth expectations for software
service providers, at least in the near term.
Maybe this is what really has Wall Street's attention:
Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to
guarantee its newest smart device was kept hidden from the
public for as long as possible. But the secret is out, and some
early viewers are claiming its everyday impact could trump the
the iPad. In fact, ABI Research predicts 485 million
of this type of device will be sold per year. But one small
company makes Apple's gadget possible. And its stock
price has nearly unlimited room to run for early in-the-know
investors. To be one of them, and see Apple's newest smart
3 Stocks That Stole Wall Street's Spotlight in
originally appeared on Fool.com.
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