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More Slack in Market: Boeing Mixed, Apple Tonight

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Wednesday, April 28, 2021

We see more slack in Wednesday pre-market indexes, following a mostly flat Tuesday and a rather sluggish past couple weeks. Although we are seeing the occasional massive blowout surprise, like from Alphabet (GOOGL - Free Report) yesterday afternoon, it would seem the market had already priced in the success of Q1 earnings season before it began. The Dow looks to open -65 points, the Nasdaq -20 and the S&P 500 in positive territory… by one point.

We also hear from Fed Chair Jerome Powell following the latest two-day meeting of the Federal Open Market Committee (FOMC), in which he will articulate in a press conference developments on policy decisions in the wake of burgeoning inflation levels entering the market. The 10-year Treasury bond, however, has remained stubbornly below the optimum 2% rate, which the FOMC has been trying to hasten into existence. We expect little change from the last time Powell spoke on the economy.

Advance Trade in Goods for March hit a new all-time low — or is it high? — at -$90.6 billion, another step down from the previous month’s -$87.1 billion. Because these are advance numbers, they are subject to revisions, but there’s no getting around the fact that our trade deficit has tripled since the start of the 21st century. Going back to the 1970s and before, we always carried a zero balance in trade. Those days are long gone. The market will not be concerned with this.

Boeing (BA - Free Report) reported mixed Q1 results, missing expectations on its bottom line: -$1.53 per share, which was off the -$1.17 estimate but better than the -$1.70 per share reported a year ago, on $15.2 billion, which outpaced the Zacks consensus of $14.38 billion. It’s no surprise to anyone the Boeing has had a bad couple of years, going back to 737 MAX issues pre-Covid, and this quarter marks the sixth consecutive quarter with negative earnings.

Operating and Free Cash Flow figures came in-line with expectations, -$3.4 billion and -$3.7 billion, respectively. The company expects to be cash-flow positive sometime next year. Boeing considers 2021 an “inflection point” for the company (as per the letter to investors from CEO David Calhoun); presumed pent-up demand in commercial jet orders, along with positive effects of federal government assistance to keep Boeing’s operations continuing, have yet to manifest themselves in earnings results. For more on BA’s earnings, click here.

After today’s close, we look forward to Zacks Rank #2 (Buy)-rated Apple (AAPL - Free Report) reporting fiscal Q2 numbers. Earnings are expected to come in more than 50% better than a year ago to an even $1.00 per share. Revenues of $77.62 billion in the quarter would be a 33% gain year over year. Apple is not expected to have trouble surmounting these estimates; the company has not missed on the bottom line for five years.

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