Apple Lowers Guidance, Walmart Disappoints

We begin a holiday-shortened trading week with news from Apple (NASDAQ:AAPL) that has sent shares down in the pre-market this morning: earlier revenue projections for the tech giant’s fiscal Q2 of between $63 and 67 billion are not expected to be met. This is largely due to assessments about the affects of COVID-19, the coronavirus which stems from Wuhan in central China that has so far claimed more than 1800 lives and infected more than 72K people.

Apple shares have sold off 2%+ on the news, taking down both the Dow index and Nasdaq — upon which the $1.4 trillion market cap weighs heavily — in early market activity. Even more concerning for stock analysts is the ripple effect a company like Apple has on things like iPhone manufacturing: are there broader implications along manufacturing supply chains, both in China and other places around the world? Currently the outlook is murky, but it’s certainly something market participants are pricing in a bit.

Also, Walmart (NYSE:WMT) has posted its first quarterly earnings miss in the past two years, posting earnings of $1.38 per share on $141.7 billion — shy of the $1.43 per share and $142.5 billion expected, respectively. A supply disruption in Chile — apparently being viewed as a one-time event — took $110 million off operating income in the quarter.

The company’s current year earnings estimate has come down to $4.93 per share, down from the previous Zacks consensus. This is expected to cause some downward earnings revisions from covering analysts, which had helped buoy Walmart to a Zacks Rank #3 (Hold) prior to the earnings release. Yet shares are up half a percentage point thus far in early trading.

Empire State Manufacturing greatly outperformed expectations for February, posting 12.9 (the highest mark of the last 12 months) from an expected 4.5 and January’s read of 4.8. manufacturing output from the state of New York had been performing relatively sluggishly of late, averaging 3.5 over the trailing three months. We hope this new February jump resets regional manufacturing, which may be a sign of a rebound in goods-producing in the U.S. overall.