Both American Express Co. ( AXP - Get Report) and PayPal Holdings Inc. ( PYPL - Get Report) can act as a barometer of the American consumer, which is especially pertinent right now as many on Wall Street wonder whether or not we're at the peak of the economic cycle. American Express beat estimates on both top and bottom lines in its third quarter. CEO Stephen Squeri said much of the solid quarter was attributable to increased spending. AmEx is up almost 4% in early trading Friday. My source from TD Ameritrade told me this likely indicates the consumer is strong. PayPal, up almost 10% in early trading Friday, also beat earnings and revenue estimates. Does this give reason for pause on the idea that we are nearing the end of the cycle?
The next chapter of Apple Inc.'s ( AAPL - Get Report) business life is here. Services are what investors ultimately care about now, and there was a drop of unfortunate news on the services front this week. A Goldman Sachs note issued earlier this week said Chinese demand for iPhones was slowing, and App store revenue in China hasn't looked strong of late, according to Morgan Stanley analysts. Data the bank compiled from Sensor Tower revealed that "App Store net revenue of $3.6B fell short of $3.8B," the note said. Going forward, the Chinese economy could pose a risk. "Fear of economic slowdown in China presents a near-term overhang," the note added.
Procter & Gamble Co. ( PG - Get Report) reports earnings before the opening bell on Friday, Oct. 19. Last quarter higher commodity costs put pressure on the company's gross margins. UBS strategists warned of the same risk across the board in the economy, and we'll see if that risk shows up in P&G's earnings. "Our investment conclusion therefore involves hedging these risks to rising rates and falling margins, especially on account of trade friction, wherever possible," UBS wrote.
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