What's going on?
Apple – the world’s largest public company – cast a spell on investors after it reported better-than-expected quarterly earnings on Wednesday, and its shares rose a magical 2%.
What does this mean?
Apple’s revenue and profit last quarter exceeded investors’ already-high expectations, after reports earlier this month that the company had asked its suppliers to increase iPhone 11 production. Importantly, then, sales of iPhones – still its flagship product – rose by more than predicted. And revenue from the company’s services like music- and video-streaming was also higher than expected, which bodes well for its plan to focus on growing the segment.
But investors were also closely watching Apple’s revenue forecast for this quarter, which includes the all-important holiday shopping season. Apple’s prediction was more-or-less what investors were expecting, but they might still be superstitious: the company frightened investors last Christmas with a warning that its phone sales hadn’t grown as hoped. But it might not be haunted by the same problem this year, thanks to the new iPhone’s more varied (read: lower) price points (tweet this).
Why should I care?
For you personally: Apple lurks around every corner.
As the largest public company in the US, Apple has an eerie influence on the direction of both the country’s and the global stock market – and therefore on your portfolio. Even if you don’t own Apple’s shares directly or via an exchange-traded fund, its fortunes will still affect your financial future: your pension fund’s likely to have an indirect stake in the company.
The bigger picture: But the US central bank is even more influential.
The more immediate impact on your financial future is from the US Federal Reserve, which on Wednesday announced, as expected, another cut to US interest rates. One effect is that saving money is now less rewarding – which might encourage spending on iPhones and the like. But with US economic growth higher than expected last quarter, the Fed probably won’t work any more magic this year.