Apple Crushes Estimates, Stock Falls

The market is falling under selling pressure this morning, with the Nasdaq leading the way on the downside.

AAPL absolutely crushed estimates last night. Earnings and revenues were well above consensus, gross margins were higher, and the company sold a ton of iPods. The company offered conservative guidance, but everyone already knows management does this. So I am surprised by the drop in the stock. I would look to add to it on further weakness.

Semis are also down this morning (-2.8%) on the heels of a weak LRCX report. Retail stocks are bucking the weakness.

The CPI inflation data was mixed this morning, even though the drop in energy prices should soon begin to show in the data. Nonetheless, this pushed up bond yields to the 4.79% area.

After the extreme outperformance by the COMP over the last 2 weeks, a pullback should not be surprising. The volatility could also be exacerbated by options expiration tomorrow. So far, we have seen mostly negative reactions to earnings reports, but this does not change my longer-term view that growth stocks (including tech) will have a strong year.

In other news and notes:

• Asian markets rise overnight
• Bernanke testifies about budget deficit problems
• CAL beats earnings estimates
• UNH doesn't report EPS; stock falls
• JPM downgrades AAPL
• BofA raises AAPL tgt to $107; Amtech $115
• Merriman starts TSCM with Buy
• Walt Mossberg previews Vista
• MER crushes consensus estimates
• BGG misses EPS estimates; guides lower
• GES ups Q4 EPS guidance
• Lehman raises ANF target to $85
• GOOG files outdoor display patent

long AAPL, GOOG