Good Evening, Investor:
Wednesday, April 27, 2016
The Federal Reserve left its interest rates unchanged, but its statement gave no real clues about the next time it might raise the key rate. The markets greeted the ambiguity with subdued trading that left the major indexes mixed.
The Dow rose 51 points, with 22 of its 30 components gaining ground; the S&P 500 Index inched 3 points higher; and the tech-heavy Nasdaq couldn't escape the downward gravitational pull of Apple's shares, falling 25. Advancers led decliners by seven to three on the NYSE and more narrowly on the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $7.00 to close at $1,250.40 an ounce, and the price of crude oil jumped $1.29 in heavy trading to settle at $45.33 a barrel. Crude supplies jumped two million barrels last weekmore than expectedbut traders appeared to focus more on the continued drop in U.S. production, down for its seventh consecutive week.
In earnings news
- For the first time in 13 years, Apple Inc. reported a quarterly revenue decline. Sagging sales of its flagship product, the iPhone, led to a 13% drop in revenue in its fiscal second quarter to $50.6 billion. IPhone sales dropped 16%, with particular weakness in China. Net income tumbled 22% to $10.5 billion. Revenue, net income, and forecasts for current-quarter revenue were all well below expectations, and Apple's shares (AAPL) dropped 6.26%. Apple's cash and marketable securities, though, continued to balloon, reaching $233 billion.
- Comcast Corp. reversed its 8,000 subscriber loss from the year-ago quarter to gain 53,000 video subscribers in the first quarter of 2016. Profit rose from $2.06 billion to $2.13 billion on revenue of $18.79 billion, up 5.3%. Results were ahead of expectations. Comcast partly credited the turnaround in the quarter to its new set-top boxes and improved customer service. Its shares (CMCSA) gained 0.41%.
- Twitter's shares (TWTR) plummeted 16.28% after reporting slight user growth of 1.6% from the prior quarter and lower-than-expected revenue growth. It narrowed its quarterly loss from $162.4 million a year ago to $79.7 million. Revenue was $594.5 million, up 36%, a slowdown from its year-ago quarterly growth of 74%. Its revenue forecast for the current quarter also came in well under expectations.
In other business news
- As expected, the Federal Open Market Committee left interest rates and its policies unchanged at the conclusion of its meeting today. The Fed noted continued improvements in the labor market and rising incomes, although household spending moderated and fixed business spending was "soft." Economic growth in general appeared to have slowed, while inflation expectations in the short term remained low. The Fed also seemed slightly less concerned about the health of the global economy. Analysts' initial reactions to the Fed's statement were that it remained uncertain whether the Fed would raise interest rates at its June meeting.
- The National Association of Realtors' Pending Home Sales Index rose 1.4% in March to a reading of 110.5. The year-over-year figure was also 1.4% higher. The Northeast led the way, up 3.2%, while the West saw a 1.8% monthly decline, putting the year-over-year figures 7.9% lower after an extended run-up in pending sales.
It will soon be the start of vacation season, that wonderful opportunity to transition from knowing where you are and being bored to having no idea where you are and excited because it's a chance to stand in the middle of the road looking at a map, lost, the locals honking all around you. Unfortunately, millions of people have the same idea, and so all the lost people end up clustering in the same cities year after year.
For vacationers seeking to avoid the tourist hordes, data-research website Priceonomics has run the numbers and discovered the least touristy vacation destinations. Based on the number of international tourists relative to the number of residents, the least touristy place to visit is Bangladesh, which has 1,273 residents for every tourist. That's a lot of horns directed at that one tourist, should they be lost in the middle of the road. The most touristy place in the world, by contrast, is the tiny European principality of Andorra, which annually receives 32.4 tourists for every single resident. If you're lost in Andorra and ask for directions, chances are very good that you'll be asking someone as lost as you.
Of course, there's a big difference between the ratio of tourists to residents and the absolute crush of tourists, and there it's a different story. Greece received more than 22 million tourists in 2014. Austria's tourists numbered more than 25 million, and Hong Kong recorded nearly 28 million tourists. New York City, meanwhile, had 12 million international visitors in 2014 and a whopping 44.5 million domestic visitors, all of whom are currently in line for tickets to "Hamilton."
The imbalanced tourism picture in Andorra would have made for a great "Twilight Zone" episode: Millions of tourists flock to a city every year, but there haven't been any real residents in a century. No one notices because they're too busy bumping into each other, never saying sorry. When they return home, they all go on TripAdvisor and leave reviews along the lines of, "Beautiful area! But watch out for the locals. They're rude and don't seem to know anything about their own country."
Social Media Managing Editor
The opinions stated are those of the author and are not intended to be used as investment advice. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund.
18,041.55, +51.23 or +0.28%
4,863.14, -25.14 or -0.51%
2,095.15, +3.45 or +0.16%
S&P MidCap 400
1,488.33, +6.17 or +0.42%
1,154.15, +3.42 or +0.30%
10-Yr Treasury Notes
45.33, +1.29 or +2.93%
1,250.40, +7.00 or +0.56%