Benchmarks finished modestly up on Wednesday after Apple, the largest U.S. company by market cap, reported upbeat earnings. Fed's positive view of the economy was also welcomed by investors. The Fed, however, maintained interest rates at their current levels in February, providing no update on the next hike.
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The Dow Jones Industrial Average (DJI) gained 0.1% to close at 19,890.94, with Apple contributing the most to the blue-chip gauge. The S&P 500 advanced a meagre 0.03% to close at 2,279.55. The tech-laden Nasdaq Composite Index closed at 5,642.65, increasing 0.5%. The fear-gauge CBOE Volatility Index (VIX) went up 3.4% to settle at 12.40. A total of around 3.9 billion shares were traded on the NYSE on Wednesday. Decliners outpaced advancing stocks on the NYSE. For 50% stocks that declined, 47% advanced.
Apple's Upbeat Earnings
Apple Inc.'s ( AAPL ) first quarter of fiscal 2017 earnings of $3.36 per share and revenues of $78.4 billion easily topped the respective Zacks Consensus Estimate of $3.22 and $76.9 billion. On a year-over-year basis, both metrics registered growth of 2.4% and 3.3%.
The good show was driven by impressive sales of Apple's latest smartphone model iPhone 7 and 7 Plus. Performance of Apple's Services business was also impressive. Total iPhone unit sales came in at about 78.3 million, up 5% year over year. Revenues from iPhone also grew 5% from the year-ago quarter to $54.4 billion (69.4% of total revenue).
Services, which include revenues from Internet Services, App store, Apple Music, AppleCare, Apple Pay, licensing and other services, surged 18% year over year (with extra one week in the quarter) to nearly $7.2 billion. App Store sales in December alone topped $3 billion. Apple said that it expects Services "revenues to be the size of a Fortune 100 company this year." Shares of Apple finished up 6.1% in its biggest one-day pop since July 27 (read more: Apple Q1 Earnings and Revenues Beat, Increase Y/Y ).
Other tech giants Facebook Inc. ( FB ) closed up 2.2% and Nvidia Corp. ( NVDA ) finished up 4.4%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Fed Keeps Rates Unchanged
Meanwhile, the Fed ended its two-day policy meeting on Wednesday and revealed that measures of consumer and business sentiment have improved of late. But the Fed kept rates unchanged within a range of 0.5% to 0.75%. The central bank had raised rates by a quarter percentage point in December, marking just the second hike in more than 10 years.
More importantly for investors, the central bank didn't give any sign that it would raise rates in its next meeting in March, putting the probability of such a move at only 18%, according to CME Group.
U.S. manufacturers witnessed their strongest growth in more than two years in January. The ISM manufacturing index manufacturing index climbed to 56% last month from 54.5% in December, marking the fifth straight gain and also its highest level since the end of 2014. Separately, construction spending dipped 0.2% in December, a slight decline after a solid year of growth, according to the Commerce Department.
Stocks That Made Headlines
Facebook, Inc.'s earnings streak continues with yet another better-than-expected quarterly performance. Facebook's fourth-quarter 2016 adjusted earnings of $1.24 per share and revenues of $8.8 billion easily topped the respective Zacks Consensus Estimate of $1.11 and $8.5 billion. ( Read More )
Europe's largest oil company Royal Dutch Shell plc ( RDS.A ) reported weaker-than-expected fourth-quarter results, as profits in its downstream business slipped on depressed refining margins. ( Read More )
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