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Overnight Markets: Apple smashes forecasts

Overnight Markets: Apple smashes forecasts

US stocks closed lower on Tuesday, with the S&P 500 ending a five-day rally, as talks to restructure Greece's debt stalled and took the shine off surprisingly strong quarterly results from Apple.

Apple shares jumped 9% in post-session trading after the Silicon Valley group stunned Wall Street with record quarterly revenues of $46.3 billion generated by the sale of 37 million iPhones, helped by the launch of the new 4S model. This led to record net profits of $13.06 billion, or $13.87 per share, well ahead of analyst expectations of $10.07 per share.

This is a turnround from last October when Apple missed analyst forecasts for the first time in years as a result of the later release of the new iPhone.

However, there was disappointment elsewhere as corporate earnings from Verizon Communications and Travelers came below expectations. 

The Dow Jones industrial average finished down 33 points, or 0.26%, at 12,676. The Standard & Poor's 500 Index was down one point, or 0.1%, at 1,315. The Nasdaq Composite Index rose two points, or 0.09%, at 2,787.

Equities suffered as European finance ministers pressured bondholders to provide greater debt relief for Greece, stoking fears the nation may fail to make a 20 March bond payment.

The Federal Open Market Committee started a two-day meeting on Tuesday, at the end of which policymakers will begin a new practice of declaring their interest rate projections.

Earlier yesterday, Travelers shed 3.8% after reporting a smaller-than-estimated profit. But analysts had expected the decline and called it a buying opportunity.

Verizon's profit also missed estimates as its wireless business was hit by the high costs of sales of advanced phones, such as the Apple iPhone. Verizon’s shares fell 1.6%.

McDonald's reported stronger-than-expected sales in December, but its shares declined on investor concerns its profit may have exceeded expectations only because of income unrelated to operations. The company’s shares fell 2.2%.

Elsewhere, Peabody Energy declined 1.7% after earnings missed estimates. Zions Bancorporation plunged 7.6% after the bank reported lower-than-forecast fourth-quarter earnings. Coach surged 5.8% after reporting a 15% increase in quarterly profit.

In Asia, equities gained on Wednesday in late-morning session after the yen declined and Apple reported quarterly profit that more than doubled.

The MSCI Asia Pacific Index rose 0.8% to 121 as of 11:03 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average rose 0.9%. Australia’s S&P/ASX 200 added 0.7% and South Korea’s Kospi Index advanced 0.9%. Stock markets in China and Hong Kong are closed for the Lunar New Year holiday.

In company news, Sony advanced 2.9% and Lynas Corp, an Australian rare earths miner, rose 3.9%. Hynix Semiconductor led gains among suppliers to Apple after the world’s largest technology company surged in after-hours trading.

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