Apple takes shine off global stocks rally
The S&P and the Dow opened little changed yesterday, but the Nasdaq Composite was pulled lower by a 1 percent fall in Apple’s shares on concerns about the new iPhone X’s hefty price tag and delayed shipping. A Nov 3 shipping date for the iPhone X, priced at $999, raised questions about supply constraints ahead of the holiday season.
The three major Wall Street indexes hit record highs on Tuesday as the market closed higher for the second straight day. The indexes have been hitting record highs this year as they bounce back from periodic setbacks caused by turmoil in Washington, questions over US interest rate hikes, doubts about the Trump administration’s ability to push through its pro-business reforms, and lately, tensions over North Korea.
“The slight weakness we’re seeing this morning is after a two-day rally. The fundamentals and technicals, however, remain strong,” said Peter Cardillo, chief market economist at First Standard Financial in New York. At 9:37 am ET (1337 GMT), the Dow Jones Industrial Average was up 7.76 points, or 0.04 percent, at 22,126.62 and the S&P 500 was down 1.74 points, or 0.07 percent, at 2,494.74. The Nasdaq Composite was down 13.77 points, or 0.21 percent, at 6,440.51. “There are concerns over the bull run, which is on several hope factors. But the list of worries is still there ... That would dampen the prospect of a stronger stock market,” Cardillo said. Six of the 11 major S&P sectors were lower, with financials leading the decliners. The energy index was up 0.65 percent as oil prices rose after the International Energy Agency said a global surplus of crude was starting to shrink. Apple’s shares were down 1.08 percent at $159.17. Centene rose about 6 percent after the health insurer said it would buy privately held Fidelis Care for $3.75 billion.
Western Digital fell more than 3.75 percent after Toshiba agreed to focus on selling its chips unit to a group led by Bain Capital and SK Hynix, but did not rule out a deal with other bidders.
Nordstrom gained 5.8 percent after a source said the Nordstrom family has selected private equity firm Leonard Green & Partners to help take the high-end retailer private.
Declining issues outnumbered advancers on the NYSE by 1,266 to 1,195. On the Nasdaq, 1,308 issues fell and 954 advanced. The pan-European STOXX 600 dipped 0.1 percent as weakness in chipmakers was compounded by a drop in miners . Chipmakers have been the best-performing among Europe’s tech stocks this year, accounting for a large chunk of the sector’s outperformance. AMS shares have gained 165 percent year-to-date.
“The economics of the Apple announcement are interesting because it will really test this theory that inflation is going to be weak,” said Mike Bell, global markets strategist with JP Morgan Asset Management in London.
“With the iPhone coming in around $1,000 it will be interesting to see how healthy demand is. If it’s relatively healthy I think it shows that there is still quite a lot of pricing power for US companies and consumers have confidence.”
Meanwhile, China stocks edged up yesterday to hover near 20-month highs as robust economic growth and hopes of further reforms bolster investors’ confidence, even as regulators tap the brakes on riskier types of credit. Both the blue-chip CSI300 index and the Shanghai Composite Index ended up 0.1 percent, at 3,842.61 points and 3,384.15 points, respectively. Consumer and real estate firms led the gains, while banking stocks weakened. After languishing for nearly two years, China’s stock market has come alive in recent months thanks to strong corporate profit and economic growth, rekindling the interest of investors burnt by a mid-2015 crash. An index tracking investor confidence rose to 58.6 points, the highest level since January 2016, as investors were more optimistic about economic conditions both at home and abroad, according to the China Securities Investor Protection Fund.
China’s economy has defied expectations for a slowdown this year, with early fears that a debt-crackdown will knock output eclipsed by a sustained construction boom and resurgence in global growth. Also supporting the market, margin financing-money investors borrow from brokerages to purchase stocks-has risen in the past two weeks to the highest level this year, according to UBS Securities, reflecting improving risk appetite.
UBS strategist Gao Ting said that although policymakers remained focused on reducing financial risks, “the recent strength of the RMB against the USD points to lower risk to domestic liquidity from capital outflow.” Indeed, the yuan’s surge this year has helped increase foreign purchases of Chinese equities. Net purchases of mainland A-shares via the “Stock Connect” scheme increased for five months in a row to 27 billion yuan ($4.14 billion) in August, while foreign holdings under the Qualified Foreign Institutional Investor (QFII) scheme jumped 18 percent in the second quarter.
Most Asian stock markets were higher yesterday after US shares rose on encouraging jobs data while worries about North Korea and twin hurricane disasters eased. Tokyo’s Nikkei 225 rose 0.5 percent to 19,879 points and India’s Sensex was up 0.3 percent at 32,242.41. —Agencies