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Stocks May See Early Strength On Apple Earnings - U.S. Commentary

Upbeat earnings news from tech giant Apple (AAPL) is likely to contribute to some early strength on Wall Street on Wednesday. The major index futures are currently pointing to a moderately higher open for the markets, with the Dow futures up by 29 points.

The upward momentum for the markets comes after Apple, the world's largest publicly-traded company by market capitalization, reported better than expected quarterly results after the close of trading on Tuesday. Shares of Apple are up by 9.8 percent in pre-market trading.

Apple reported second quarter earnings of $12.30 per share, higher than $6.40 per share last year, while revenues jumped 59 percent to $39.2 billion. Analysts had expected the company to earn $10.06 per share on revenues of $36.8 billion.

The company benefited from a notable increase in the number of iPhones sold during the quarter, which soared 88 percent year-over-year to 35.1 million.

While the results from Apple have generated some positive sentiment, trading activity may be somewhat subdued ahead of the Federal Reserve's monetary policy announcement and Chairman Ben Bernanke's subsequent press conference.

The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

Peter Boockvar, managing director at Miller Tabak, said, "Aside from another amazing quarter from Apple that is single handedly driving markets this morning, the other focus today will be the FOMC meeting and Bernanke press conference."

"With about $200 billion and two months left in Operation Flatten the Yield Curve, we may have to wait until the June meeting in order to get good clues to whether they will stop cold turkey or extend it," he added.

Additionally, the futures have given back some ground following the release of a report from the Commerce Department showing a sharp drop in durable goods orders in the month of March.

The report showed that durable goods orders tumbled by 4.2 percent in March following a revised 1.9 percent increase in February. Economists had expected a more modest drop of about 1.5 percent.

With traders reluctant to make any significant moves ahead of the Fed announcement, stocks turned in a relatively lackluster performance during trading on Tuesday, ending the day mixed.

The major averages closed on opposite sides of the unchanged line, with the Nasdaq posting a modest loss. While the Nasdaq fell 8.85 points or 0.3 percent to 2,961.60, the Dow rose 74.39 points or 0.6 percent to 13,001.56 and the S&P 500 climbed 5.03 points or 0.4 percent to 1,371.97.

In overseas trading, stock markets across the Asia-Pacific region also turned in another mixed performance on Wednesday. Japan's Nikkei 225 Index rose by 1 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

The major European markets have also turned mixed after moving to the upside earlier in the session. While the U.K.'s FTSE 100 Index has dipped below the unchanged line, the German DAX Index and the French CAC 40 Index remain up by 1.1 percent and 1.9 percent, respectively.

In commodities trading, crude oil futures are climbing $0.65 to $104.20 a barrel after advancing $0.44 to $103.55 a barrel on Tuesday. An ounce of gold is fetching $1,642.80, down $1 from the previous session's close of $1,643.80. In the previous session, gold rose $11.20.

On the currency front, the U.S. dollar is trading at 81.27 yen compared to the 81.32 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.32 compared to yesterday's $1.3197.

by RTT Staff Writer

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