Apple publishes its quarterly report today, November 2. This is the company's first earnings report under new CEO Ternus. The backdrop for it is challenging.
A quarterly report is the publication of revenue, profit and guidance for the next quarter. The main problem is that more expensive memory is putting pressure on Apple's costs.
Why this matters to a trader. Apple's weight in the indices is greater than any other company. Its move after the report drags the entire US market with it.
What does this report test?
For a company's new leader, such a report is always a test. The market looks not only at the numbers.
Two things matter:
- The results themselves - revenue, profit and guidance for the next quarter.
- Management's rhetoric - how the tone of the new CEO's comments is changing.
What is the main nerve?
The cost of memory chips has risen sharply. And memory is one of the largest cost items in smartphones and computers.
Key point: the more expensive the components, the greater the pressure on margins. It is precisely on this line and on comments about future costs that the market will check its expectations.
Why does this concern more than just AAPL?
Apple is the largest company in the S&P 500 and Nasdaq 100 by weight. Its reaction after the report drags both indices with it.
The effect goes further:
- Indices. The S&P 500 and Nasdaq 100 move in step with the stock.
- Futures. The momentum carries over to futures on these indices.
- Semiconductors. Related stories in the chip sector get pulled along.
It is convenient to keep the timing of such reports alongside macro data in the economic calendar.
What to expect in terms of volatility?
There is no forecast of direction here - only scenarios for the amplitude of the move.
- Scenario A. The numbers and guidance match expectations. The move fades quickly, leaving a local spike in the first minutes.
- Scenario B. A deviation in margin or cautious guidance. The range in AAPL widens sharply, and the momentum carries over to index futures.
A separate risk is the evening. In scenario B, spreads widen in thin liquidity after the main session closes.
Do you trade earnings in the first minutes?
Familiar: you sit at the chart, wait for the numbers, and everything is decided by the first thirty seconds after publication. The problem is that prop firms interpret precisely these trades differently: in some programs, trading at the moment of an earnings release is considered normal, in others your account is closed for a position at the data release without regard to the result. The lists of available stocks and indices also differ. The method of calculating the daily loss differs too. This is looked at in the terms before paying for the challenge - Apple's report is already today.