US pre-open: Apple earnings, Chinese GDP give stock futures a lift
Better-than-anticipated results from Apple and growth in China were set to give US equity indices a boost when Wall Street's opening bell rang on Tuesday.
Stock futures on the S&P 500 were 0.5% higher by 08:34 in New York, the Dow Jones Industrial Average rose 0.3% while the Nasdaq jumped 0.8%.
Apple said its quarterly profit rose 13%, as sluggish iPad sales were offset by strong demand for its new larger-screen iPhones. The Californian technology giant reported soaring demand for its new iPhone 6 and iPhone 6 Plus released in September, as the handset continues to attract consumers despite strong competition.
Apple said net income in its fourth quarter ended 27 September rose to $8.47bn from $7.51bn in the corresponding period in 2013, while earnings per share increase to $1.42 from $1.18, adjusted for a recent stock split. Revenue rose to $42.12bn, a 12% increase year-on-year. Analysts had estimated that Apple would post earnings of $1.31 per share, with revenue of $39.88bn.
"The performance of the iPhone is crucial to the Apple investment case. The iPhone range did incredibly well," said analysts at Killik.
Not all earnings were well-received by the market, however, with shares of McDonald's and Coca-Cola falling sharply ahead of the bell.
Fast-food chain McDonald's said that third-quarter revenues fell to $6.99bn from $7.32bn a year earlier, well below the $7.19bn consensus estimate, as global same-store sales fell 3.3%. The company also said that global comparable sales for October are "expected to be negative".
Coca-Cola also disappointed after the beverages giant reported flat soda volumes and declining revenues and profits in the third quarter. The company also launched a new cost-cutting programme which aims to lower costs by $3bn a year by 2019.
In other news, Chinese gross domestic product (GDP) growth slowed down to 7.3% in the third quarter, from 7.5% in the second quarter. Analysts had expected grow to ease to 7.2%.
Acting as a backdrop, market strategist Bill Hubard wrote to clients saying that: "This month’s turmoil in financial markets has been a “bloodbath” for hedge funds (which by some estimates manage $2.8trn in assets) inflicting large losses at an array of multi-billion-dollar firms in the industry’s worst stretch since late 2011."
There was little in the way of US economic data due out on Tuesday, except for US existing-home sales which are predicted to have climbed 1% to 5.1m in September, after a 1.8% decline in August.