The Federal Reserve today said it is keeping U.S. interest rates at record lows in the face of persistent threats from a weak international economy and excessively low inflation. But it also suggested the possibility of a rate hike as early as December. This tidbit of news took a promising rally of about 100 points on the Dow and erased it faster than a chicken could eat a slug. The slug, however, fought back and at the close the Dow rallied to close up 197 points on heavy trading volume to 17,779. Bank stocks led markets higher as the prospect of a rate hike in December would be a boost to bank margins.
Twitter reported earnings and revenue today that handily beat estimates. Shares however were lower as forward guidance and subscriber signups did not set the gurus all atwitter. Net income came in double estimates at 10 cents per share vs a 20 cent per share loss last year. Revenue was up 58% over this time last year. People are frustrated with Twitter because it remains a story of unfulfilled promise. Kind of like drowning in a sea of opportunity. We see and hear about athletes, politicians, actors and social types sending tweets to minions but the unanswered question on everyones lips is: How can this be made into a more profitable venture? Facebook benefits from people spending lots of time on its site while Twitter seems more fleeting despite seeming to be ever present. With a new management team now in place it will be interesting to see how this develops.
Apple reported a 38% jump in earnings and a 22% rise in revenue in what was the company’s biggest and best results ever! Apple now sits on over $206 billion in cash.
Boeing lost out in its bid to get the Air Force long range bomber contract to Northrup Grumman. Northrup’s shares were higher on the news and people are now speculating that Boeing, which is 3x larger than Northrup, will either protest the results or just buy Northrup in a hostile takeover. Sort of a “financial carpet bombing” if you will. Either way the bean counters and lawyers will be busy.