On the day Apple further flexed its earnings muscle, Nasdaq wanted to remind investors that it is more than just a benchmark for technology stocks. In fact, during a webcast for
InvestmentNews on Tuesday called, “Nasdaq vs. S&P: Who owns the real earnings power,” Nasdaq OMX managing director Dave Gedeon sought to somewhat downplay Apple's impact on the overall earnings of the NDX.
Gedeon noted that the Nasdaq-100 with Apple had earned 20% as of April 12, but a still-robust 14% without Apple (The updated number on the latter data was 16.5% before trading on Tuesday, he added). It was an especially interesting assessment since Apple had just announced its second-quarter earnings—up $49.72 to trade above $600 a share, which trumped analysts' expectations.
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Apple's strong quarter pushed U.S. stocks higher, with the Dow Jones Industrial Average jumping 68 points and Nasdaq rising 63 points. Yet, Gedeon sought to point out the strength of companies outside of the technology sector, especially those in consumer goods.
Gedeon, noting the diversity of the index, said that the companies driving the year-to-date earnings growth include Sears Holding Corp., Fossil Inc., Seagate Technology and Monster Beverage Corp. The names driving the revenue growth, he added, include Whole Foods, Starbucks and Green Mountain Coffee.
“Apple's contribution, while large in terms of the index, is not what's truly driving the index as a whole,” Gedeon said.
Furthermore, Gedeon said that investors should view the major tech companies—such as Apple, Google and Microsoft—in the same way that people viewed the original companies on the Dow Jones index: They “are really the bedrocks of our modern economy,” he said.
The smartphone, Gedeon added, is “no different” than a rail car in the 1860s or a truck at the turn of the 1900s in that it is a modern piece of equipment that people had not seen and didn't know how to implement, “but which has turned out to increase productivity, move commerce and make our lives easier.”
“One thing we like to point out though is that technology is a constantly-moving target and to focus exclusively on the tech side would take away from some of what these companies are doing,” Gedeon continued. “They are becoming the modern industrials.”
