MarketWatch.com - Pre-Market Indications

Wednesday, April 21, 2010

Indications: U.S. futures stuck after Apple's blowout quarter

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures were stuck in neutral Wednesday, as optimism over Apple's blowout earnings was tempered with wariness over a proposal that could tax banks to the tune of $2 trillion.

Futures on the tech-heavy Nasdaq 100 climbed 8.25 points to 2,032.50, while S&P 500 futures fell 1.4 points to 1,204.00 and Dow Jones Industrial Average futures lost 13 points.

Apple profit soars 90%

Stronger than expected iPhone sales -- 131% more than in the year-ago quarter -- drive earnings higher for Apple. In addition, unit growth for Mac desktops and laptops come in strong. Stacey Delo and Rex Crum hash out the numbers.

After markets shut on Tuesday, Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 244.59, -2.48, -1.00%) reported a 90% jump in quarterly profit on 49% revenue growth, both well ahead of estimates as iPhone, iPod and Macintosh shipments climbed.

"We believe Apple's fiscal second-quarter report was very strong and that the company's EPS and gross margin guidance is quite conservative for the fiscal third quarter. We continue to believe Apple's valuation is very attractive and we look forward to even more new products including a major iPhone upgrade cycle later this year," said Ben Reitzes, an analyst at Barclays Capital, who hiked his price target to $315 from $300.

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Apple shares rose 5% in pre-market trade. Apple's suppliers in Europe including ARM Holdings /quotes/comstock/15*!armh/quotes/nls/armh (ARMH 11.26, +0.22, +1.98%) advanced as well.

Outside of techs, however, the bank sector could see pressure as the BBC and The Wall Street Journal reported that the International Monetary Fund is proposing that the Group of 20 leading industrialized nations should adopt two banks taxes: one on balance sheet size, and another based on profits and compensation.

Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 33.69, +0.67, +2.03%) fell over 2% after reporting a 16% profit fall. Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 30.45, +0.89, +3.01%) climbed over 3% after returning to profit. Regional banks Huntington Bancshares /quotes/comstock/15*!hban/quotes/nls/hban (HBAN 5.83, +0.34, +6.19%) and KeyCorp /quotes/comstock/13*!key/quotes/nls/key (KEY 8.58, +0.45, +5.54%) also rose in pre-market trade after first-quarter results.

On the deal front, Visa /quotes/comstock/13*!v/quotes/nls/v (V 94.05, +0.93, +1.00%) said it's buying CyberSource /quotes/comstock/15*!cybs/quotes/nls/cybs (CYBS 19.44, +0.49, +2.59%) for $2 billion, or $26 a share, in cash.

The airline industry will be in the spotlight as the Air Transport Association estimated that the Icelandic volcano crisis cost airlines more than $1.7 billion in lost revenue through Tuesday -- six days after the initial eruption. See story.

There's little on the economic docket apart from weekly energy inventories data.

Greece jitters continued to weigh on the euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.3384, -0.0056, -0.4167%) , which fell 0.5% vs. the dollar. See Greece story.

Europe stocks turned lower, pressured by banks, while Asian equities climbed on optimism over earnings.

U.S. stocks rose Tuesday as positive results from companies including Harley-Davidson and Coach buoyed confidence on consumer spending. The S&P 500 and Nasdaq Composite each climbed 0.8%, though concerns over Coca-Cola's revenue and International Business Machines' bookings limited gains for the blue-chip Dow Jones Industrial Average to 0.2%.

Steve Goldstein is MarketWatch's London bureau chief.


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