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Why Apple is Driving Stock Market Gains

August 02, 2017

  • Apple’s third quarter earnings report was better than expected, fueled by increasing profit margins, and strong sales of its leading products like iPads and iPhones.
  • The report drove its stock to a record high, and similarly pushed the DJIA into record territory.

2 min read

Apple posted earnings and the market said “iLike.”

Apple’s stock jumped more than 6%, and by Wednesday morning, it traded at more than $157 a share. The news pushed the Dow Jones Industrial Average index (DJIA) over 22,000, a record high.

Why Apple has bite

Apple Inc. is more than just a maker of sleek iPads and flashy iPhones. It’s also one of the most successful companies in the world.

Apple has a market cap of around $800 billion, making it one of the most valuable companies globally, and putting it in a league with Amazon, Google and Microsoft. It’s also sitting on a cash pile worth $261 billion. For perspective that’s about the size of the entire Gross Domestic Product (GDP) of Portugal.

With that kind of cash sitting around, Apple could pay its investors a dividend, plow money back into its operations, or it could easily acquire other companies. To get a sense of the size of the companies it could acquire, it could purchase both car makers Ford and General Motors without having to borrow a dime.

A better-than-expected third quarter earnings report on Tuesday sent Apple stock soaring to a new high.

Here are highlights from the earnings report:

Fun fact: In contrast to other companies reporting their second quarter earnings now, Apple’s fiscal year ends September 30. So it’s reporting earnings for the third quarter.

For more on what a quarter is, and what’s in an earnings report, click here.

By Steve Weintraub

Investment Profile

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