Dow, S&P 500, Nasdaq move higher with Apple earnings in the wings

Yahoo Finance’s Dan Howley reports:

Apple (AAPL) reported its fiscal first quarter earnings after the bell on Thursday, beating expectations on the top and bottom lines but falling short on iPhone revenue. Sales out of the company’s Greater China region were also lower than Wall Street anticipated in the quarter.

For the quarter, Apple reported earnings per share of $2.40 on revenue of $124.3 billion. Analysts were looking for EPS of $2.35 and revenue of $124.1 billion, according to Bloomberg consensus estimates.

Apple’s iPhone segment brought in $69.1 billion versus expectations of $71 billion, down slightly from the $69.7 billion the company reported for the segment in the last year. The company’s Services business generated $26.3 billion in revenue, in line with Wall Street’s expectations. Greater China sales topped out at $18.5 billion. Wall Street was expecting $21.5 billion.

China has been a persistent area of trouble for Apple over the last two years. Sales in the region declined 8% in 2024, falling to $66.9 billion, and 2% in 2023. At the time, Apple blamed weakness in the renminbi versus the dollar and lower iPhone and iPad sales.

Read more here.

Stocks hit their lows of the day with about 20 minutes left in the trading session after President Trump once again teased 25% tariffs on Mexico and Canada. The US dollar index spiked on the news, reversing earlier losses, and stocks hit their lows of the day.

However, as the intraday chart below shows, that selling action was short-lived.

Yahoo Finance’s Dan Howley reports:

Apple (AAPL) is set to announce its first quarter earnings after the bell on Thursday amid concerns that iPhone sales aren’t getting the kind of boost from its Apple Intelligence platform that investors initially hoped.

Both Jefferies and Loop Capital downgraded Apple’s stock last week, with Jefferies analyst Edison Lee saying he expects Apple to report lower-than-anticipated results for the December quarter and miss on expectations for the second quarter.

Oppenheimer also downgraded shares on Wednesday, citing slower iPhone growth pressured by competition in China and a lack of AI innovation to catalyze a new upgrade cycle.

According to estimates by IDC and Canalys, overall iPhone market share fell 1% year over year in Q4 to 23% despite the broader market for smartphone shipments increasing by 3%. Apple kicked off its big AI push in October, releasing the first raft of its Apple Intelligence updates.

Read more here.

On Wednesday, Federal Reserve Chair Jerome Powell admitted the economic outlook for 2025 is likely more uncertain than normal.

“In the current situation there’s probably some elevated uncertainty because of the significant policy shifts in those four areas that I mentioned, tariffs, immigration, fiscal policy, and regulatory policy,” Powell said on Wednesday.

Deutsche Bank chief US economist Matthew Luzzetti told Yahoo Finance looking at how tariffs could impact the inflation outlook “epitomizes” why the Fed is likely to take a cautious outlook to cutting rates.

Without tariffs, Luzzetti would expect core PCE inflation, the Fed’s preferred gauge, to fall to 2.5% by the end of 2025. This would be in line with the Fed’s targets.

“But if you factor in 25% tariffs on Mexico and Canada, it is very easy to get to 3% plus core PCE inflation forecast this year and acceleration in inflation not a deceleration,” Luzzetti said.

This makes Luzzetti believe the chart below is “exactly why the Fed has uncertainty right now and is in a wait and see mode.”

And while not the base case, Luzzetti added that a significant reacceleration in inflation above 3% could bring the conversation of Fed rate hikes back to the forefront.

UPS’s (UPS) announcement that it will cut back on deliveries for its largest customer, Amazon (AMZN), sent its stock tumbling as much as 15% on Thursday.

As part of an agreement with Amazon, UPS said it said would cut the volume of Amazon deliveries it transports by more than 50% by the second half of 2026. UPS also said Thursday it expects revenue of “approximately $89 billion” in 2025, below Wall Street’s consensus forecasts of $94.9 billion.

Evercore ISI analyst Jonathan Chappell wrote in a note to clients that the quarterly release had “something for everyone … but more for the bears.” Chappell described the pace of the reduction of Amazon deliveries as a “surprise.”

“UPS will realign its network for this volume loss, but the speed at which it will unfold will negatively impact near-term results,” Chappell wrote.

Yahoo Finance’s Jen Schonberger reports:

A new GDP report Thursday and the expectation of a sticky inflation reading Friday should reinforce the Federal Reserve’s new wait-and-see approach on interest rates.

Fed Chair Jay Powell outlined that approach Wednesday after the central bank decided to keep rates on hold, its first pause following three consecutive cuts at the end of 2024.

Policymakers are adopting a more cautious stance as they evaluate several unknowns about the economic policies of the new Trump administration.

Read more here.

Yahoo Finance’s Claire Boston reports:

Housing contract activity slowed down in December, suggesting higher mortgage rates are giving some buyers pause.

The Pending Home Sales Index, which tracks contract signings on existing homes, dropped 5.5% from November to 74.2, snapping a four-month streak of gains, according to the National Association of Realtors (NAR). An index level of 100 is equal to contract activity in 2001.

Contract signings declined in all parts of the country, led by the most expensive regions where mortgage rates have the biggest effect on affordability. The West saw a 10.3% drop in activity, followed by the Northeast with an 8.1% decline.

Read more here.

The Nasdaq Composite (^IXIC) struggled to gain on Thursday, dragged by shares of software giant Microsoft (MSFT) and chip maker Nvidia (NVDA).

Microsoft fell roughly 6% after the software giant’s quarterly results. Wall Street analysts pointed out Microsoft’s Azure growth was came in lighter-than-expected and may not reaccelerate in the back half of the year.

Meanwhile Nvidia shares fell more than 3%. Earlier this week the AI chip giant was hit by jitters over China’s DeepSeek less expensive and more efficient artificial intelligence model, and speculation that the Trump administration is considering stricter limits on the company’s sale of its chip technology in China.

Nvidia is down roughly 16% over the past four days.

Comcast (CMCSA) stock fell over 10% early Thursday after the company reported a bigger-than-expected drop in broadband customers in the fourth quarter and failed to add more subscribers to its Peacock streaming service.

The company reported a decline of 131,000 broadband users, more than the 100,000 loss Comcast Cable CEO Dave Watson estimated in December. The escalating losses reflect recent competitive challenges as mobile providers like Verizon (VZ), T-Mobile (TMUS), and AT&T (T) enter the space with more flexible offerings to attract lower-income consumers.

Still, the company said it remains committed to its connectivity business and announced strategic changes to become a “challenger” in the industry and “play to [its] strengths” as internet traffic rapidly expands amid the streaming boom.

“You will see us shift our strategy to package mobile with more of our higher-tier broadband products, both for new and many of our existing customers,” Comcast president Michael Cavanagh said on the earnings call.

Comcast’s broadband struggles come as the company also reported a decline of 311,000 TV consumers as more consumers cut the cable cord in favor of less expensive streaming services.

To that point, the company continued to stress the importance of Peacock, although subscriber growth was flat quarter over quarter with total subscribers remaining at 36 million.

Comcast did improve profitability, reporting an adjusted EBITDA loss of $372 million compared to a loss of $825 million in the same period last year. Losses are expected to improve throughout the course of the year, according to management.

Read more here.

Bitcoin (BTC-USD) rose to hover near $106,000 per token on Thursday. Token bulls pointed to Fed Reserve Chair Jerome Powell’s comments related to crypto and banks as a catalyst that helped send the coin more than 3% higher over the past 24 hours.

“Banks are perfectly able to serve crypto customers as long as they can understand and service the risks,” Powell said during Wednesday’s post-Federal Open Market Committee press conference.

Bitcoin is up more than 50% since the November preelection amid optimism of pro-crypto policies under a Trump administration.

Yahoo Finance’s Dan Howley reports:

Oracle (ORCL), fresh off of announcing its part in the massive Stargate Project alongside OpenAI and SoftBank (SFTBY), debuted its latest AI agents aimed at manufacturers during its CloudWorld event in Austin on Thursday.

The agents are designed to help supply-chain workers across a host of jobs, ranging from procurement to sustainability. AI agents are specialized AI bots that can take actions on a user’s behalf — either autonomously, or with their oversight — across multiple apps.

Companies ranging from Microsoft (MSFT) and Google (GOOG, GOOGL) to Amazon (AMZN) and Nvidia (NVDA) are pushing AI agents as the next major step in AI evolution, thanks to their ability to help streamline mundane but time-consuming tasks.

Read more here.

Yahoo Finance’s Laura Bratton reports:

American Airlines (AAL) CEO Robert Isom on Thursday morning expressed his condolences after a crash involving 64 passengers and crew, with no survivors expected.

A plane operated by American’s subsidiary PSA Airlines collided with a military helicopter on Wednesday night as it approached Reagan Washington National Airport.

”We’re absolutely heartbroken for the family and loved ones of the passengers and crew members and also for those that were on the military aircraft,” Isom said during a press briefing with reporters.

The flight was traveling from Wichita, Kan., to DCA when it collided with a US Army Black Hawk helicopter carrying three soldiers on a training mission, media reports said.

Read more here.

US stocks were mixed at the open on Thursday as investors digested earnings from Microsoft (MSFT), Meta (META), and Tesla (TSLA).

The Nasdaq Composite (^IXIC) rose 0.3%, while S&P 500 (^GSPC) gained 0.3%. The Dow Jones Industrial Average (^DJI) traded just below the flatline.

Stocks were attempting to climb back after the Federal Reserve stood unchanged on interest rates, indicating cautiousness around the topic of inflation.

Microsoft shares declined more than 5% on Thursday following its quarterly results. Social media platform Meta and EV giant Tesla both gained. Apple (AAPL) results are expected after the bell.

The US economy grew at a slower-than-expected pace in the fourth quarter, preliminary figures showed.

The Bureau of Economic Analysis’s advance estimate of US gross domestic product (GDP) in the fourth quarter showed the economy grew at an annualized pace of 2.3%, below the 2.6% expected by economists surveyed by Bloomberg. The reading compares with the 3.1% seen in the third quarter.

Increases in consumer and government spending drove economic growth in the quarter, while decreases in investment offset some gains. For the year, the US economy grew at a 2.8% pace, slightly below the 2.9% seen in 2023 but above the 2.5% growth seen in 2022.

Economic data: Fourth quarter GDP (first estimate); personal consumption (fourth quarter advance estimate); initial jobless claims (to Jan. 25)

Earnings: Apple (AAPL), Blackstone (BX), Caterpillar (CAT), Comcast (CMCSA), Dow (DOW), Deckers Outdoors (DECK), Intel (INTC), Mastercard (MA), Mobileye (MBLY), Southwest Airlines (LUV), UPS (UPS), United States Steel (X), Visa (V)

Here are some of the biggest stories you may have missed overnight and early this morning:

American Airlines jet collides with helicopter in midair near DCA

YF columnist Rick Newman: In Trump’s economic vision, everybody’s on their own

Tesla stock rises despite miss, amid vow to return to growth

UPS stock sinks as revenue outlook falls short

Powell holds interest rates — and his ground

Microsoft, Meta defend AI spend in DeepSeek fallout

European Central Bank cuts interest rates by 0.25% as expected

Tesla’s (TSLA) quarter wasn’t great.

Margins missed estimates. Sales came in light. And CEO Elon Musk was back to his antics on the earnings call, conveying guidance that by his own admission is “insane.”

Investors now have a choice to make on Tesla.

Do you avoid the stock because it’s a disruptive EV company that may underwhelm in the near term as it invests in its business? Plus, Elon could fall out of favor with President Trump?

Or do you buy the stock because the company will likely have driver-less cars on the road in 2026, alongside humanoid robots in factories?

I don’t have the answer for you. But RBC analyst Tom Narayan makes a host of good points on how his clients are viewing the stock:

“Moonshots getting real. Tesla announced that it will have a paid unsupervised full-self driving (FSD) service in Austin this June. We expect this to be an end- to-end fleet service similar to Waymo (except will use a Tesla vehicle). We expect the car to have pedals and steering wheels and not be a cybercab. The release announced Tesla will have unsupervised FSD for its own customers as well as the robotaxi business in parts of this year. Management also indicated that there is interest from a number of major car companies to license FSD technology but would only entertain orders if volumes are high. Regarding supervised FSD, the company says it is working to launch in Europe and China this year. Regarding Optimus, Tesla now thinks it will make several thousand this year and will utilize some at company facilities. Next year once it produces version 2, it can do 10K per month as opposed to 1K per month.”

Levi’s (LEVI) was having a relatively good earnings call last night.

Considering how challenging retail was for the holidays (if your name isn’t Walmart (WMT)), to see organic sales for the Levi’s brand up 8.2% is win for that team.

But Levi’s 2025 EPS guidance of $1.20 to $1.25 was a country mile away from consensus for $1.38 a share.

While the blame is going to foreign-exchange fluctuations, I think there is a large chunk that reflects what’s happening at department stores. Macy’s (M) continues to shut a ton of stores, and it’s not alone in doing so post-holidays.

If these stores are closing, Levi’s loses places to sell its wares. Management has often told me they are doing big business in their own stores and online. But the unwinding of the department store space is a structural problem.

More on that here in my chat at the World Economic Forum with Ralph Lauren’s (RL) CEO Patrice Louvet.

The Fed may have stood pat on rates Wednesday, but Goldman Sachs still sees a world where rate cuts happen in 2025.

Goldman’s chief economist Jan Hatzius said in a new note:

Nvidia (NVDA) isn’t having a good week.

The combination of the surprising DeepSeek news and fears of the Trump administration further cracking down on chip flow has the stock down 13% on the week.

Interestingly, that hasn’t stopped the Nvidia bulls from buying the dip.

New data out of Vanda Research shows individual investors bought $562.2 million of Nvidia shares on Monday’s rout. Self-directed traders bought $359.7 million of the stock on Tuesday.

I certainly appreciate everyone racing to read Meta’s (META) cash flow statement to see how much it’s spending on capital expenditures, mostly related to AI infrastructure build-outs.

But the reality is all that matters to the Meta investment thesis — for now — is that the company is taking its new AI and applying it to sucking in more ad dollars. Meta remains an advertising-led business, full stop.

To that end, Mark Zuckerberg made an important point on this on the earnings call last night:

“This year, the improvements of the business are going to be taking the AI methods and applying them to advertising and recommendations and feeds and things like that. So the actual business opportunity — for Meta AI, and AI studio and business agents, and people interacting with these AIs — remains outside of 2025, for the most part,” Zuckerberg said.

Pivotal Research analyst Jeff Wlodarczak said, “In the end, we see a strong revenue growth outlook from increased usage/new products/better targeting/higher prices.”

Sounds right to me.