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Today in the Market (4/29/2022)

Good Evening. The major equity indexes closed a tumultuous month lower, as falling prices escalated into the close.

The S&P 500, the Dow Jones, and the Nasdaq Composite all dropped. The S&P 500 finished down 3.63%, and for the month of April, it was down 8.80%, its worst monthly performance since March 2020. The Dow fell 2.77% today and 4.90% overall for the month. The Nasdaq was the worst performer, falling more than 4.00% on Friday and 13.00% in April alone, the index’s worst month since October 2008.

EARNINGS

Despite persistent supply chain issues, Apple (AAPL) posted Q2 2022 earnings after the bell on Thursday, exceeding analysts’ estimates on the top and bottom lines and generating record sales.

The most important figures from the report, as contrasted to what Wall Street expected, are listed below, as compiled by Bloomberg.

  • Revenue: $97.3 billion versus $93.98 billion expected

  • Adjusted EPS: $1.52 versus $1.42 expected

  • iPhone revenue: $50.57 billion versus $49.16 billion expected

  • Mac revenue: $10.44 billion versus $9.23 billion expected

  • iPad revenue: $7.65 billion versus $7.19 billion expected

  • Wearables revenue: $8.81 billion versus $8.98 billion expected

  • Services revenue: $19.82 billion versus $19.78 billion expected

Throughout the epidemic, Apple managed to avoid supply chain interruptions to a considerable extent. In the first quarter, the business outperformed Wall Street projections, while CEO Tim Cook did admit that supply chain issues had a negative impact on iPad availability. Meanwhile, CFO Luca Maestri stated that supply chain concerns were present in the iPhone and Mac product lines.

Aside from its quarterly results, Apple continues to face regulatory scrutiny in the United States and internationally regarding its App Store. The European Union is enacting new rules that might force Apple to let app developers offer their own payment methods through their apps, posing a threat to the company’s Services division.

Similar regulations are being considered in the United States, albeit Congress is significantly further behind in putting the proposed law into action.

GDP

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In the first quarter of this year, the US Gross Domestic Product (GDP) declined 1.40% on a yearly basis, the lowest level since the lockdown-heavy days of spring 2020.

  • GDP is a tally of the value of all products and services generated in a country. It is the most generally used indicator of economic growth.

While you don’t want it to shrink, a closer examination of the Q1 figure exposes a few anomalies that may make things appear worse than they are. Lower inventories and a widening trade imbalance were chiefly responsible for bringing GDP substantially lower last quarter, which economists don’t find very worrying.

Experts are concentrating on the basics: consumer spending (the economy’s primary driver) and business investment. Despite the Omicron wave, increasing inflation, and the war in Ukraine, both individuals and businesses continued to shop.

Looking forward… The US economy is predicted to expand in the current quarter and continue to develop at a moderate pace throughout the year. However, as the Fed raises interest rates, some are forecasting a recession.

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