The Rundown - Apple Rallies Despite iPhone Slump, Weak Jobs Report Sends Stocks Higher

Starting point is 00:00:00 Public.com presents the rundown, your daily market update in five minutes. My name is Zaidmani, and today is Friday, May 3rd. In today's episode, we dive into the latest jobs report and explain why bad news is good news. We also recap earnings from Apple and Coinbase, and then stick around to the end of the show to find out how much money Google pays Apple every year. All right, let's go. Stocks had a nice bounce back on Thursday with the Dow, S&P, and NASDAQ, all seeing some. some nice gains. And tech seemed to dominate the rally yesterday with the NASDAQ got more than one and a half percent. You know, I think after sleeping on it for a day, investors were pretty

Starting point is 00:00:38 happy with Jerome Powell's comments at the Fed meeting. I mean, it's pretty comforting to know the Fed isn't expected to hike rates anymore. If you have no idea what I'm talking about, go check out yesterday's episode of the rundown where we recap the Fed meeting and what it means for interest rates moving forward. There's also a 90-second recap on public.com's Instagram page. And breaking news, as I'm recording this show, the jobs report for April just came out and it doesn't look so great. The U.S. economy added 175,000 jobs in April, which was much less than the 240,000 jobs that was expected. And to give you some further context, in March, the economy added 303,000 jobs. The unemployment rate climbed to 3.9%. So from this data,

Starting point is 00:01:18 it looks like hiring is slowing down. But I guess the good news is, is the U.S. economy had 40 consecutive months of job gains. Now, what's weird is the market is actually up big in response to this news. I'm looking at the pre-market right now. All three major indices jumped after this jobs report came out. It might be because bad economic data might push the Fed to cut rates sooner, which would be good for investors. So yeah, markets can be weird like that sometimes. Today is one of those days where the bad news is good news. What is good news, though, is that earnings season has been going pretty well.

Starting point is 00:01:49 Earning season starting to wind down. 75% of companies in the S&P 500 have already reported earnings. And 77% of those companies have beat earnings. That's pretty good because the usual beat rate is around 67%. All right, let's run through some headlines. Speaking of companies beating earnings, Apple reported their Q1 earnings last night, and they did better than expected. Even though Apple's revenues declined 4% and their profits declined 2%, both those numbers came

Starting point is 00:02:16 in better than Wall Street estimates. So I guess things aren't as bad at Apple as Wall Street was expecting. One thing that stood out to me was that iPhone sales declined by 10% compared to a year ago. I guess people just aren't buying the iPhone. iPhone 15, even though it has USBC. So despite sluggish sales from the iPhones and continued uncertainty in the Chinese market, shares of Apple were rallying. And one reason for that could be because Apple announced a record-setting $110 billion stock buyback. That's the largest ever for any company. And they also forecast their revenues to grow in Q2. And that was enough to make investors pretty happy. Apple stock is up

Starting point is 00:02:52 more than 7% in pre-market trading. And they needed this because Apple shares were down more than 10% this year going into earnings yesterday. Let's talk about Coinbase, the largest cryptocurrency exchange in the U.S. They reported earnings last night, and they also beat expectations. The revenues and profits both came in higher than expected. In fact, they had a quarterly profit of over $1 billion. I mean, every time Bitcoin's price goes up, Coinbase benefits, back in March, Bitcoin's price hit a record high of $73,000. So I'm not really surprised to see that Coinbase's consumer transaction revenue doubled to $935 million compared to last year. And if you look at the number of downloads for Coinbase's app, it jumped to $1.7 million in March, up from $640,000 in February.

Starting point is 00:03:33 So as we kind of already know this, Coinbase kind of lives and dies by the performance of Bitcoin. That's made some analysts uncertain about whether momentum from the first quarter is going to continue. I mean, if you look at the crypto markets right now, Bitcoin's down about 20% from its peak in March. And according to Censor Tower, downloads for Coinbase's app were down 44% in April compared to March. So Coinbase stock didn't really react to the earnings, but the stock is up more than 40% here. Let's talk about some stocks making moves today. Shares in Block, the company formerly known as Square, are up this morning after reporting solid Q1 earnings and raising their Q2 guidance to be on both earnings and revenue estimates. The shining spot was Cash App, which is owned by Block,

Starting point is 00:04:13 which grew its monthly active accounts to 57 million, up from the 56 million in the previous quarter, and the inflow for active accounts was up 11% year over year. And I think the big news was that Block announced that it would dedicate 10% of its gross profit, from its Bitcoin products to buying Bitcoin on the company's books. Block's CEO Jack Dorsey, who was also the original founder of Twitter, is a big Bitcoin guy. So it's not really a big surprise here. Block's Bitcoin revenue was up over $2.7 billion in the quarter, around 46% of the company's total top line.

Starting point is 00:04:43 And investors were loving it. Block's stock is up more than 8% this morning. On the flip side of the company not doing so good this morning is Expedia. The stock is down more than 11% this morning after the travel site lowered its revenue outlooks for 2024. They reported lower than expected bookings for VRBO, which is their Airbnb competitor. Is it VRBO or Verbo? I don't know. But either way, it's not doing so good. Now, you can now book VRBOs directly from Expedia's platforms.

Starting point is 00:05:08 And I think they were hoping that that was going to help increase bookings. Hasn't really happen so far. And that made investors kind of nervous. And as a result, Expedia stock is down big this morning. Let's wrap the show with a fun fact. Today's fun fact is about Google and Apple. According to new unsealed court documents, Google paid Apple, $20 billion in 2022 for Google to be the default search engine in the Safari browser on iPhones and Macs.

Starting point is 00:05:33 This info was revealed in the Justice Department's antitrust lawsuit against Google. I mean, how sweet is it to be in Apple's position here? They're getting paid $20 billion a year just to make Google the default search engine. That's more than 16% of Apple's operating income. And for Google, it's probably worth it because the iPhone is the most used smartphone in the U.S. And Google probably doesn't want someone like Microsoft Bing to take that. market share. If Bing somehow ended up becoming the default search engine on the iPhone, I can imagine that being the first thing that people switch back to Google in the settings.

Starting point is 00:06:03 Right after turning off the screen time notifications. Well, all right, guys, that's the rundown for this week. What an action pack week. I feel exhausted. By the way, if you guys enjoy our show, please hit us with that five-star rating on Apple and Spotify. The engagement really does help the show. Next week should have a lot of action as well. Yes, earnings season is winding down, but we still got some big-time earnings coming up next week. We got Palantier, Disney, Rivian, Uber, Airbnb, Shopify, AMC, for those of you guys that still care about that. We're going to be covering all of it right here on the rundown. Oh, and go check out the leading indicator podcast from public.com.

Starting point is 00:06:36 If you guys want to learn more about the Federal Reserve's policy and any more detailed discussion about the Fed meeting this week. Thank you guys again for listening. We'll see you guys back here on Monday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in this show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy. sell or hold that security.

Starting point is 00:06:57 Run down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals. Learn more at public.com disclosures. In partnership with Zayid Mani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.

The Rundown - Apple Rallies Despite iPhone Slump, Weak Jobs Report Sends Stocks Higher

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