Although S&P 500 stocks faltered Friday, the index posted positive gains in the first half of 2013 – its strongest first half, in fact, since 1998.
The market has sustained its share of volatility over the past month, and further fluctuations are possible in the near term. However, the market’s primary trend remains bullish. Stock market corrections can be scary, as recent events indicate – the possibility of the Federal Reserve tampering with interest rates, problems in China and concerns over second-quarter profits.
While the roller-coaster ride troubles many investors, buckle your seat belts and continue to look for new growth and income investments.
Two Town Crier “50” stocks made headlines last week.
• Apple Inc. (AAPL; $410.66) stock is declining, largely because iPhone inventories are high and sales are lower – consumers in India and Western Europe have flocked to cheaper alternatives.
Hoping to boost sales, Apple introduced an exchange program wherein the company pays up to $200 for older iPhones if a user upgrades to an iPhone5. While the tactic may increase sales, it could also put pressure on Apple’s profit margins.
In other news that reduced share price, lawyers offered closing arguments in the lawsuit that accuses Apple of colluding to inflate e-book prices. Additionally, while many hedge funds identified Apple as among their favorite stocks, they are now downgrading its value because of the lower gross margins pulling down the company’s earnings.
Apple will report its second-quarter results in late July – they should be light compared to previous quarters.
Analysts currently expect a flat year in sales, with a 21 percent decline in earnings. Many analysts consider Apple stock a hold or long-term buy, with a mean target price of $538 and a high of $888.
• Microsoft Corp. (MSFT; $34.46) is still trying to get back in the game with its cloud-computing venture. The company explored purchasing Nokia’s mobile phone business as a way to build an e-commerce website but eventually gave up. Microsoft did succeed in collaborating with Oracle Corp. on a cloud-computing partnership that allows customers to run Oracle software on Microsoft’s cloud platform.
The company plans to release a refinement of Windows 8 – Windows 8.1. The new version allows users to launch the operating system in a desktop mode that should please fans of the older versions of Windows. The new 8.1 Windows also returns the Start button to the lower-left corner of the desktop and allows users to boot directly to the desktop interface – a positive for the many users who haven’t updated.
With developers building multidevice, multiscreen, cloud-connected experiences, Windows provides capabilities to build modern applications quickly using Microsoft and Oracle.
Many analysts consider Microsoft stock a hold, but with new applications imminent, the holiday season for Windows 8.1 looks much more optimistic. Analysts target a mean price for Microsoft at $36.20 and a high at $42.