Monday December 6, 2021
Apple Releases Earnings Report
Revenue for the third quarter came in at $81.4 billion. This was up 36% from $59.7 billion during the same quarter last year and exceeded the $73.3 billion expected by Wall Street.
"This quarter, our teams built on a period of unmatched innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important," said Apple CEO Tim Cook. "We're continuing to press forward in our work to infuse everything we make with the values that define us — by inspiring a new generation of developers to learn to code, moving closer to our 2030 environment goal, and engaging in the urgent work of building a more equitable future."
Apple's quarterly net income was $21.7 billion. This was up from $11.3 billion in net income at this time last year.
The company reported an increase of 50% in iPhone sales to $39.6 billion for the quarter. Apple's Services segment's sales increased 33% to $17.5 billion. The company's Services segment includes subscription services, such as iCloud and Apple Music as well as the App Store, AppleCare and Apple Music. The Wearables, Home and Accessories segment posted revenue of $8.8 billion in revenue. Mac and iPad sales brought in $8.2 billion and $7.4 billion respectively.
Apple, Inc. (AAPL) shares ended the week at $145.86, down 1.6% for the week.
Alphabet Reports Earnings
Alphabet Inc. (GOOGL) released its latest quarterly earnings on Tuesday, July 27. The tech titan reported revenue that exceeded expectations.
The company reported revenue of $61.9 billion, up 62% from $38.3 billion during the same quarter last year. This beat analysts' expected revenue of $56 billion.
"In Q2, there was a rising tide of online activity in many parts of the world, and we're proud that our services helped so many consumers and businesses," said Alphabet CEO Sundar Pichai. "Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone's digital experience."
Alphabet posted net income of $18.53 billion, or $27.26 per share for the second quarter. This was up from $6.96 billion, or $10.13 per share during the same time last year.
The parent company of Google saw shares jump 3% following the earnings release. Advertising revenue from Google came in at $50.4 billion for the quarter. This was up 69% from the prior year's quarter. The company attributed the revenue growth to its Retail segment. Google Cloud's revenue increased to $4.63 billion, up from $3.01 billion.
Alphabet Inc. (GOOGL) shares ended the week at $2,694.53, up 1.0% for the week.
Amazon Posts Earnings
Amazon.com, Inc. (AMZN) reported its latest quarterly earnings on Thursday, July 29. The online retail giant reported slowing sales growth.
The company's net sales reached $113.1 billion for the second quarter. This was up 27% from $88.9 billion in sales last year at this time.
"Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic," said Amazon CEO Andy Jassy. "At the same time, AWS has helped so many businesses and governments maintain business continuity, and we've seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud."
The company's net income for the quarter was $7.8 billion. This was down from $5.2 billion at the same time last year.
Andy Jassy became CEO of Amazon on July 5, while founder Jeff Bezos stepped into the role of Executive Chair. The company forecast sales growth may increase 16% in the third quarter. Amazon attributed slowing sales growth to changing consumer behavior as many COVID-19 related restrictions were lifted during the second quarter.
Amazon.com, Inc. (AMZN) shares ended the week at $3,327.59, down 9.4% for the week.
The Dow started the week at 35,056 and closed at 34,935 on 7/30. The S&P 500 started the week at 4,410 and closed at 4,395.26. The NASDAQ started the week at 14,821 and closed at 14,673.
Treasury Yields React to GDP Release
On Thursday, the national GDP was released indicating annualized growth of 6.5% for the second quarter. Economists expected GDP growth of 9.2%. Treasury yields increased slightly in response.
"Growth has peaked, the economy will slow a bit in the second half of this year, then much more noticeably in the first half of 2022 as fiscal support fades," said Mark Zandi, chief economist at Moody's Analytics. "The contours of growth are going to be shaped largely by fiscal policy over the next 18 months. The tailwind just blows less strongly, and may stop altogether by this time next year."
On Thursday, the U.S. Department of Labor released its weekly initial jobless claims report. The report showed 400,000 first-time claims, down 24,000. This was higher than the 380,000 expected by economists.
"Beyond weekly ups and downs, the trend in total [unemployment] filings should remain downward over coming weeks," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "Overall, job growth should pick up and labor shortages should ease as near-term constraints – virus concerns, child-care issues and enhanced unemployment benefits – diminish. But rising virus cases could be a headwind for the labor market and the economy."
The 10-year Treasury note yield closed at 1.24%, while the 30-year Treasury bond yield was 1.90%.
Mortgage Rates Hold Below 3%
This week, the 30-year fixed rate mortgage averaged 2.80%, up from last week's average of 2.78%. At this time last year, the 30-year fixed rate mortgage averaged 2.99%.
The 15-year fixed rate mortgage averaged 2.10% this week, down from 2.12% last week. During the same period last year, the 15-year fixed rate mortgage averaged 2.51%.
"As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time," said Sam Khater, Chief Economist at Freddie Mac. "Largely due to the current environment, the 30-year fixed-rate remains below 3% for the fifth consecutive week while the 15-year fixed-rate hits another record low."
Based on published national averages, the savings rate was 0.06% as of 7/19. The one-year CD averaged 0.14%.