Apple (AAPL, Financial) and Walt Disney Company (DIS, Financial) posted the Dow’s strongest gains on Tuesday. The companies’ stock value gains followed a dramatic market selloff on Monday, Aug. 24 that led to a Dow Jones Industrial Average loss of 3.59%. Here’s a look at some of the factors boosting the current market returns for these two large-cap stocks.
Apple
Apple has been one of the most impacted companies in the DJIA in terms of effects from China’s economic volatility. Additionally, it has also been struggling with the market’s outlook on its iPhone sales, which generated the majority of the firm’s third quarter revenue at 63%. In its most recent earnings report, sequential quarter revenue growth was down 22% for the iPhone and sequential quarter revenue growth in Greater China overall was down 21%. China’s recent currency devaluation and overall market volatility have caused even more uncertainty around these two factors, pushing the stock to new lows.
In recent days, the stock has traded far below its 50-day moving average of $121.32 and below its 200-day moving average of $120.59. In Tuesday’s trading, however, the stock regained some of its losses as many investors bought back in at the current market low. The stock led the Dow Jones Industrial Average, finishing up 0.60%. In Wednesday’s trading, the stock has continued to rally, up 3.43% at midday.
One reason for the increase in the stock price could be the company’s recent developments in electronic vehicles. Apple reportedly has been adding to its team of professionals in the automated car business with a potential electronic vehicle partnership likely in the near term.
Additionally, CEO Tim Cook reported on the firm’s iPhone sales growth and China sales expectations overall in a media note to Jim Cramer at TheStreet. Tim Cook’s comments have helped to ease some market uncertainty on iPhone sales and China exposure which have been a main market focus for the company in recent weeks. Cook’s comments point to strong App Store performance in China over the last few weeks, which have combined with strong business growth in July and August in China overall.
Walt Disney
In recent weeks, Walt Disney’s stock value has also reached new lows primarily resulting from an industry concern around lower subscription fee revenue. The company has seen its stock fall far below its 50-day moving average of $112.91 and its 200-day moving average of $103.92. However, on Tuesday the stock emerged from the market selloff regaining a considerable portion of its recent losses. At the close of the trading day on Aug. 25, the stock reported a gain of 0.56% with a closing price of $95.89. On Wednesday, Disney’s stock continues to gain, increasing to $97.93 at midday.
Walt Disney also appears to be in the midst of a strong fourth quarter which could likely exceed analysts’ expectations. The company’s most recent third quarter earnings included revenue growth that slightly disappointed investors; however, two recent developments in the fourth quarter have been fueling revenue growth prospects overall. First, sales revenue projections have increased from added marketing efforts around the firm’s September release of its Stars Wars retail toy products which are associated with the new Star Wars: The Force Awakens movie. Second, the approaching football season has led many analysts to increase their estimates for ad sales and subscription fees associated with the firm’s ESPN revenue.
