Here are five things you must know for Wednesday, Jan. 30:
1. -- Stock Futures Get Lift From Apple Ahead of Fed's Rates Decision
U.S. stock futures were higher on Wednesday, Jan. 30, and global stocks steadied as solid reports from Apple Inc. (AAPL) and Boeing Co. (BA) sent waves of relief through world markets rattled by persistent concerns from U.S. companies over slowing growth in China.
Contracts tied to the Dow Jones Industrial Average rose 245 points, futures for the S&P 500 were up 13.25 points, and Nasdaq futures gained 65.50 points.
With Apple guiding to a relatively strong fiscal second quarter, investors look to have cleared a major earnings season hurdle as they await a decision on interest rates Wednesday from the Federal Reserve and the U.S. jobs report on Friday that could complicate assumptions for growth and inflation in the world's biggest economy.
China's vice premier, Liu He, arrives in Washington on Wednesday for a two-day summit on trade that could unlock months of disagreement over issues such as intellectual property protection and forced technology transfers that have stalled negotiations for several months.
Apple CEO Tim Cook told CNBC that there was "a bit more optimism in the air in January" with respect to U.S.-China trade relations, adding that he was "encouraged by the comments coming out of both countries."
The Federal Open Market Committee, the Fed's policy-setting arm, will announce a decision on interest rates at 2 p.m. ET. Economists don't expect a rate hike from the Fed at the meeting, while many don't forecasting a rate hike from the central bank until at least June.
The economic calendar in the U.S. Wednesday also includes the ADP National Employment Report for January at 8:15 a.m., the Pending Home Sales Index for December at 10 a.m., and Oil Inventories for the week ended Jan. 25, at 10:30 a.m.
The Bureau of Economic Analysis has delayed Wednesday's fourth-quarter GDP report following the reopening of the government. The partial shutdown of the U.S. government ended Jan. 25 and lasted for 35 days. Certain agencies didn't collect economic data during the shutdown.
2. -- Apple Rises on a Slight Earnings Beat, Better-Than-Feared Guidance
Apple was rising 5.2% in premarket trading after the tech giant company beat reduced earnings and revenue estimates in its fiscal first quarter.
The tech giant reported earnings of $4.18 a share vs. an expected $4.17, while revenue came in at $84.3 billion, above consensus of $83.97 billion. Apple had forecast on Jan. 2 that it expected revenue of about $84 billion, roughly $7 billion less than expected, because of disappointing sales in China.
For the March quarter, Apple said it expects revenue of $55 billion to $59 billion, slightly less than a $58.98 billion consensus.
"While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter's results demonstrate that the underlying strength of our business runs deep and wide," said Apple CEO Tim Cook. "Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments."
iPhone revenue declined 15% from the previous year, while revenue from all other products and services grew 19%. Services revenue, an important focus of Apple's as iPhone growth slows, grew 19% to an all-time high of $10.9 billion.
"We generated very strong operating cash flow of $26.7 billion during the December quarter and set an all-time EPS record of $4.18," said Luca Maestri, Apple's chief financial officer. "We returned over $13 billion to our investors during the quarter through dividends and share repurchases. Our net cash balance was $130 billion at the end of the quarter, and we continue to target a net cash neutral position over time."
For the first time, Apple broke down gross margins by business unit, reporting that margins for its services businesses were 62.8% while product margins came in at 34.3%.
- Apple Shares Pop on Slight Earnings and Revenue Beat
- Apple Earnings Push Market Cap Gains to $100 Billion Since China Sales Warning
- Apple Gains on Better-Than-Feared Guidance and New Disclosures: 7 Key Takeaways
"All in, we believe that while we are not out of the clear just yet, as we have yet to see a resolution on the China trade front, and a strong dollar compounded by a global growth slowdown does represent a near-term risk for all companies operating internationally, we believe this quarter's results and March quarter guidance, compounded by better than expected Services growth will effectively allow the company to reset the narrative and investors to reset their expectations," said Jim Cramer and the Action Alerts PLUS team, which holds Apple in its portfolio.
3. -- Advanced Micro Devices Jumps on Solid Sales Guidance
Advanced Micro Devices Inc. (AMD) rose 10% in premarket trading after the chipmaker reported fourth-quarter earnings that met Wall Street estimates and said 2019 margins and revenue likely would top forecasts, defying investor gloom for the sector following Nvidia Corp.'s (NVDA) sales warning earlier this week.
AMD posted adjusted earnings of 8 cents a share, in line with estimates, while revenue of $1.42 billion came in slightly below estimates of $1.44 billion.
However, AMD said graphic and data center chip demand would support 2019 sales, with the company suggesting a "high single digit" growth rate, with an adjusted gross profit margin of around 41%, the highest in eight years.
"2018 was another strong year for AMD. Increased adoption of our high performance products drove a second straight year of double-digit annual revenue growth, expanded gross margins and improved profitability," CEO Lisa Su told investors on a conference call late Tuesday. "While headwinds remain in the graphics channel and macro uncertainties are causing some caution in the first half of 2019, we believe we are well positioned to gain share throughout the year and accelerate growth as we ramp our next generation 7 nanometer products."
Computing and graphics revenue was $986 million, beating estimates of $939 million. Enterprise embedded and semi-custom revenue was $433 million, below estimates of $494 million.
4. -- eBay Beats Earnings Estimates, to Buy Back $5 Billion of Stock
Shares of eBay Inc. (EBAY) rose 0.8% after the e-commerce company reported fourth-quarter earnings and revenue that topped analysts' expectations.
The company earned an adjusted 71 cents a share in the quarter, beating estimates of 68 cents. Revenue of $2.88 billion came in above forecasts of $2.86 billion.
The company said it expects first-quarter adjusted earnings of 62 cents to 64 cents a share on sales of $2.55 billion to $2.6 billion. For 2019, eBay projected revenue between $10.7 billion and $10.9 billion.
EBay also announced a "capital structure evolution" that includes a new dividend of 14 cents a share, and said that it expects to return about $7 billion to shareholders by way of dividends and stock repurchases over the next two years. The company said it would buy back $5 billion of stock in 2019.
The company also has pledged to "carefully review" a letter by activist shareholder Elliott Management, which proposed spinning off eBay's non-core businesses, online ticket seller StubHub and its Classifieds group into separate businesses from its core Marketplace.
5. -- Boeing, Microsoft, Facebook and McDonald's Lead the Earnings Parade
Alibaba Group Holding Co. (BABA) posted stronger-than-expected fourth-quarter earnings after a record Singles Day shopping event helped boost profits at Asia's biggest tech company.
Alibaba said non-GAAP earnings for the three months ended in December, the company's fiscal third quarter, were $1.77 a share, up 8.6% from the same period last year and topping the consensus forecast of $1.64. Sales rose 41% to $17.057 billion but just missed analysts' estimates of $17.47 billion.
AT&T Inc. (T) earned an adjusted 86 cents a share in the fourth quarter, matching analysts' estimates, while revenue of $48 billion came in below forecasts of $48.5 billion.
Boeing Co. (BA) blasted past fourth-quarter earnings estimates and said it and sees record plane deliveries in 2019, sending shares up 5.8% in premarket trading.
Get access to the best stock picks in Jim Cramer's investment portfolio by executing a two-minute drill on our Big Game Special on Action Alerts PLUS, Jim's VIP club for investors. Sign up now through Feb. 4 and receive 58% off the normal subscription price. Now that's a real touchdown!