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Durable Goods Could Throw in a Monkey Wrench

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Durable Goods Could Throw in a Monkey Wrench

Stocks started the trading session mixed, with the Dow and S&P moving higher but the Nasdaq feeling the pressure of Apple’s worse than expected guidance. Apple reported stronger than expected top and bottom line, but growth prospects have been tapered hitting the stock hard before the opening bell. The Fed begins its 2-day meeting on Tuesday, and will announce if it plans to continue to taper on Wednesday. Stocks ended the session in the black, with all three major indices notching up gains.

Apple’s (NASDAQ:AAPL) shares plunged nearly 7% premarket after the company reported that Q1 iPhone sales and the company’s revenue guidance were weaker than expected. Net profit was flat at $13.1 billion, but earnings per share of $14.50 beat consensus and revenue rose 6% to $57.59 billion which also topped forecasts. Apple sold 51 million iPhones, up from 48 million in the 2012 period, 26 million iPads and 4.8 million Mac computers.

The Federal Reserve is scheduled to commence a two-day policy monetary meeting Tuesday. Most expect the Fed to ignore the current market turbulence and continue to cut its bond purchases by 10 billion dollars a month to 65 billion. It’s not clear that the sharp declines in Turkey’s lira and Argentina’s peso, for example, are due to the Fed’s tapering. One caveat is that recent data points such as Tuesday release of Durable Goods orders are weaker than expected and show that 2013’s economic momentum has slowed considerably.

Prior to the opening bell the Commerce Department released durable goods orders. The headline number came in at -4.3% compared to the 1.8% expected by economics , previous month revised down to 2.6% from 3.5%. Ex-transportation orders declined 1.6%, versus the 0.5% expected. Orders for non-defense capital goods which is a proxy for business investment declined 1.3%, compared to the 0.3% expected.

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