The Dow went over 26,000 and stayed there after Apple Computer announced it would repatriate and invest $350 billion in cash into US operations. The big winner in all this was Uncle Sugar who will reap an estimated $30 billion in taxes on the deal. At the close the Dow was up 322 to 26,115 but trading volume was lower on the day.
Bank of America reported earnings today and while bottom line profits beat expectations the revenue figure did not. Bank of America reported a 7% revenue increase and a 21% gain in net income. Net interest income was up along with consumer loans and deposits however trading revenue was lower especially in fixed income trading. The bank also took a $292 million hit from troubles related to South African retailer Steinhoff which owns Mattress Firm stores in the US. CEO Brian Moynihan said the bank will benefit from tax reform as it expects its effective rate to drop by 31%.
The Federal Reserve reported that factory output increased at a 7% annualized rate in the fourth quarter, the strongest since the second quarter of 2010. Combined with national and regional surveys of purchasing managers, the figures indicate manufacturing was robust at the end of the year. Please remember that the Fed’s monthly data are volatile and often get revised.
Raw material prices are on the rise and this is being seen in a press release by Ford which lowered it forward 2018 earnings guidance in part thanks to higher costs for steel, aluminum and other metals. Shares were whacked on the news and the company plans on reporting earnings next Wednesday.