America Boasts Company Reports While Europe Gets Downgraded

Oct. 20, 2011 - PRLog -- The quarterly profit for the company Apple Inc (AAPL) did not meet investor expectations for the first time in at least six years, since consumers have postponed purchases of the iPhone until the release of the iPhone 5; the company’s shares fell at the end of trading. According to DT Trading analysts, this is an alarm bell to those traders whose intentions are anything other than “sell.” After the death of Steve Jobs, it was expected that Apple would release the fifth generation iPhone; however, the company instead presented a refreshed version of the fourth generation phone, which was a disappointment to many.

Apple’s fourth quarter profit was $6.62 billion, or $7.05 per share, compared to $4.31 billion and $4.46 per share a year earlier. This fell short of the predicted $7.31 profit per share and was the first such disappointment from Apple in the last 26 quarters.

Apple sold 17.07 million iPhones, far from the 20 million predicted by analysts polled by Bloomberg. DT Trading analysts think that the reason for such low sales figures was the company’s failure to release the new phone, which consumers were expecting, at the end of the quarter. Apple has exceeded expectations on profits for a long time now, but its managers will likely not be as inspired in their work to create new gadgets as Steve Jobs was. Therefore, investors should start getting used to future disappointments from the company as the business undergoes a gradual “correction.”

Meanwhile, the broad market index Standard & Poor’s 500 rose the highest in August out of all the US stock indexes since shares of Bank of America Corp shot up 10% after its profit report was published. The sub-index of construction companies on the S & P also jumped up 9.6% - the biggest jump since March 2009. The companies Caterpillar Inc (CAT) and Alcoa Inc (AA) went up 3.9% and led the rally among companies most closely tied to the economy. By the close of trading in New York, the S & P 500 added 2% and closed at 1,225.38, liquidating yesterday’s drop. The index rose to its highest level since August 3; incidentally, two days before the S & P ratings agency downgraded the US’s triple-A credit rating. The Dow Jones Industrial Average Index closed up 180.05 points at 11,577.05, up 1.6% from where it closed Tuesday.

However, there was some negative news today: for the third time since June 2010, Moody’s downgraded Spain’s sovereign credit rating due to threats that the European debt crisis might engulf the country next. Moody’s lowered the rating from Aa2 to A1, the fifth rating in the investment grade range, with a negative outlook. DT Trading analysts predict a further continuation of the “rating game,” with downgrades continuing right up to the ratings leaders – Germany and even possibly the US.

Predictably, Spanish, Italian, and Greek bonds are falling on this due to fears that the Euro zone is experiencing big problems and, as a result, will not be able to contain the crisis that threatens to set off a new global collapse. Furthermore, banks are running into increasing shortages of capital that they desperately need to absorb the shock from possible sovereign debt defaults. German Chancellor Angela Merkel announced yesterday that the upcoming Euro zone summit will be “an important step” but not the final step, in resolving the Euro zone’s sovereign debt crisis.

DT Trading Limited Analytical Department

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