Apple and Amazon Beat Estimates Amid Concern About Tariffs
Apple and Amazon Beat Estimates Amid Concern About Tariffs
By:JJ Kinahan
Despite surprisingly strong jobs report, signals from the labor market remain mixed
- Tech earnings fueled gains, but Amazon’s cloud miss and tariff concerns are making investors cautious.
- Apple’s supply shift and the affect of tariffs highlight the growing risks tied to China and regulatory exposure.
- The jobs report beat expectations, but severance classifications may obscure underlying weakness in employment.
Stocks posted modest gains yesterday, buoyed by strong earnings from major tech players like Microsoft (MSFT) and Meta Platforms (META). The S&P 500 rose 0.6%, while the Nasdaq Composite climbed 1.5%. Small caps also advanced 0.6%, and the Dow Jones Industrial Average edged up 0.2%.
After the close, Amazon (AMZN) and Apple (AAPL) reported earnings. Amazon beat estimates on both revenue and profit, though its cloud computing segment fell short, potentially signaling market share loss to Microsoft. While forward guidance was largely in line, Amazon cited uncertainty around tariffs as a concern.
Apple also beat expectations on both the top and bottom lines. Long dependent on China for manufacturing, the company is accelerating efforts to diversify. It now expects most iPhones shipped this quarter to come from India and Vietnam. The company also noted that tariffs could cost them $900 million.
A more subtle but significant risk is Apple’s reliance on Google, which is owned by Alphabet (GOOG). Apple receives $20 billion annually from Google for being the default search engine in Safari—accounting for roughly a quarter of Apple’s operating profits. A recent antitrust ruling against Google could jeopardize that revenue stream, with ripple effects for Apple and potentially others.
Travel’s down—but energy’s mixed
Other corporate earnings added more color to the picture. Airbnb (ABNB) matched expectations but issued a weaker outlook because demand for travel is slowing. In energy, Chevron (CVX) and Exxon (XOM) presented contrasting narratives. Chevron, down nearly 2% in premarket trading, cited lower oil prices as a reason for pulling back on share buybacks. Meanwhile, Exxon maintained its buyback pace, thanks to cost-cutting and increased production, and that lifted its shares slightly.
On the economic front, the April jobs report showed 177,000 new jobs and a steady 4.2% unemployment rate—better than forecasts but still a notable slowdown from March’s 228,000. Revisions to previous months subtracted 58,000 jobs, and federal employment declined. However, those on severance or leave are still considered employed, which could mask future declines.
The search for stable markets
I’ve been looking for a few signs before calling the market stable: Lower volatility, an S&P close above 5500 (recently achieved), and a break above the 200-day moving average at 5745. We’re not there yet, and with the Federal Open Market Committee (FOMC) meeting next week, I remain cautious. If Apple and Amazon can reverse early declines, we may see a strong session. But keep an eye on volatility—and stick to your long-term investing plan.
JJ Kinahan is CEO of tastytrade from IG—which includes tastylive, tastyfx and tastycrypto. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.