Apple’s earnings beat and buyback plan just could help give the market a win today.
That’s as long as the Federal Reserve’s latest signals don’t end up spoiling the mood for stocks.
If you’re thinking about making some buys, don’t go with the energy sector, says our call of the day from the True Contrarian’s Steven Jon Kaplan.
“It has become clearly overbought,” Kaplan writes to his subscribers.
He says attitudes toward these equities have flipped — and that’s probably bearish for them.
“The media have become unusually bullish toward energy shares — the same media who were just as vocally bearish last summer when they were compelling for purchase,” says Kaplan, whose newsletter aims to highlight the unanimous views in markets, along with how traders can go in the exact opposite direction.
“I expect much greater pullbacks to occur from their January 2018 highs before I will repurchase the energy shares and related emerging-market assets which I had sold in January 2018,” he adds.
“Most likely, the buying opportunity for this sector later in 2018 will be similar to what it had been in August 2017.”
The two big energy ETFs — the energy SPDR XLE, +0.59% and Vanguard’s product VDE, +0.75% — are both up 11% over the past month, aided and abetted by oil’s CLM8, +0.06% recent resurgence. But Kaplan isn’t buying it, though he might jump in eventually.
“I will certainly start gradually accumulating energy shares again, whenever everyone else is telling me to avoid them,” the newsletter writer promises.
Check out: Wall Street’s convinced that Trump can’t keep a lid on oil prices
And read: Global crude surplus may soon become a shortage
Key market gauges
Futures for the tech-heavy Nasdaq-100 NQM8, +0.05% are in the green, helped by Apple’s AAPL, +4.33% premarket rise, while Dow YMM8, -0.37% and S&P 500 futures ESM8, -0.24% are little changed. That’s after the Dow DJIA, -0.21% fell yesterday, while the S&P SPX, -0.14% and Nasdaq Composite COMP, +0.28% gained.
Europe SXXP, +0.66% is heading up, after Asia closed mixed. Oil CLM8, +0.06% and gold GCM8, -0.11% are advancing, while the dollar index DXY, +0.16% isn’t doing much, remaining up by about 1% for the week. Bitcoin BTCUSD, +0.75% is holding above $9,000.
See the Market Snapshot column for the latest action.
The chart
It’s not that great on the farm at the moment. A measure of how American farmers are feeling — the Purdue/CME Group Ag Economy Barometer — has dropped for a second month in a row.
“Trade-war risks and weak grain prices are hurting sentiment,” says The Daily Shot newsletter.
Poor crop conditions in some areas have also been a drag on the index. On top of that, higher machinery costs, driven in part driven by U.S. trade policy, are “adding to farmers’ headaches,” the Daily Shot says.
The quote
“A vibrant and growing city that is committed to developing its infrastructure, supporting local business and attracting new talent.” — That is how AllianceBernstein CEO Seth Bernstein described Nashville in a memo to colleagues, according to a local newspaper report.
AB — one of Wall Street’s oldest names — is leaving New York City for Tennessee, reinforcing a recent shift in finance jobs to cheaper parts of the U.S.
The economy
The Fed is expected to leave interest rates on hold this afternoon and signal no change to a tightening path of two more rate increases in 2018.
Read more: Why the Fed could make 4 rate hikes this year
And see: So, are we headed for a recession? Here’s what the Fed looks for
ADP’s April release on private-sector employment hit before the open, showing 204,000 jobs added and serving as an appetizer to Friday’s more closely watched report on nonfarm payrolls.
Check out: MarketWatch’s Economic Calendar
Earnings
Highlights from Apple’s report: Software and services, along with big growth in China, helped save the day, and shareholders are getting $100 billion in additional buybacks and a 16% increase in the quarterly dividend.
the $AAPL share buyback is larger than Goldman's market cap pic.twitter.com/1mwZzK6ne2
— StockCats (@StockCats) May 1, 2018
Beyond Apple’s earnings beat, Snap SNAP, -19.64% is getting whacked for its disappointing results late yesterday.
Lots of companies are on the earnings docket before the open, including CVS CVS, -2.74% , Yum Brands YUM, -5.08% , Mastercard MA, +2.58% , Humana HUM, -2.04% , Clorox CLX, +0.10% and Molson Coors Brewing TAP, -11.96% .
Results from Tesla TSLA, +0.06% , Kraft Heinz KHC, -1.29% and others will be in focus after the close. Elon Musk’s baby is also in the spotlight as startup Nikola Motor accuses it of patent infringement.
Don’t miss: Tesla earnings to shine the spotlight on Model 3 production
And read: Musk promises to take question from YouTuber on Tesla earnings call
The buzz
News from Facebook’s FB, +1.92% annual F8 conference: The social network plans to launch a dating feature and let users clear their browsing history.
Meanwhile, Facebook has fired an employee who allegedly boasted that he was a “professional stalker,” and the company is reportedly planning audits on its impact on under-represented communities and communities of color — and its potential bias against conservatives.
Xerox’s XRX, -4.99% CEO is resigning in a settlement with two big shareholders, Carl Icahn and Darwin Deason, a pact that puts the copier giant’s Fujifilm 4901, -5.46% deal at risk.
In political news, Texas and six other states have filed suit against the federal government to try to put an end to DACA, and Special Counsel Robert Mueller reportedly has considered a subpoena to force President Trump to answer questions.
Plus, that glowing description of the president’s health may have come from Trump himself, not his doctor.
Random reads
Kanye West calls slavery “a choice,” then tries to defend himself.
Prom news: High school targets revealing dresses with “modesty ponchos.”
The Twitterverse is blasting Jeff Bezos for spending his Amazon money on space travel.
Warren Buffett’s bet on Chinese electric cars — BYD — has been tumbling.
These members of Congress are sleeping on the job — and defending their right to do it.
France’s government draws flak after hooded youths ran amok at May Day protests.
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