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While you were sleeping: Apple paces advance

Friday 16th September 2016

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Wall Street rose, bolstered by Apple shares, even as the latest US reports showed weaker-than-expected retail sales and manufacturing output, which further reduced bets the Federal Reserve will hike interest rates next week.

A Commerce Department report showed retail sales fell more than expected last month, sliding 0.3 percent after rising 0.1 percent in July. Separately, a Fed report showed factory production slid 0.4 percent in August, while the New York Fed said its Empire State manufacturing index shrank for a second straight month.

Traders are pricing in an 18 percent chance of a rate increase at the Fed’s meeting on September 21, down from 34 percent at the start of the month and 20 percent before Wednesday’s data, according to Bloomberg. 

"These things are not pointing to the need for the Fed to raise interest rates in September. That's one of the reasons you're seeing a relief rally today," Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia, told Reuters.

In 3.11pm trading in New York, the Dow Jones Industrial Average rose 1.1 percent, while the Nasdaq Composite Index rallied 1.5 percent. In 2.56pm trading, the Standard & Poor’s 500 Index climbed 1.1 percent.

Rallies in shares of Apple and those of Intel and Microsoft, recently trading 3.2 percent, 2.8 percent and 1.9 higher respectively, led the advance in the Dow. As of 3.12pm, all 30 members of the Dow traded higher. 

Apple shares extended its gains amid optimism about its new iPhone, after the company said its iPhone 7 Plus-model sold out globally in online preorders before its release on Friday.

Meanwhile, US Treasuries declined on the latest economic data, pushing yields on 10-year notes three basis points higher to 1.72 percent.

“There’s nothing in these numbers that tells us rates should be heading up,” Mark Kepner, managing director and equity trader at Themis Trading in Chatham, New Jersey, told Bloomberg.

“Yields are moving higher overseas and that means there is demand that’s going to come out of our bond market and maybe our stock market because of those investors that have been trying for yield that will leave,” Kepner said. “That’s more important than the data here.”

In Europe, the Stoxx 600 Index ended the session with a gain of 0.6 percent from the previous close. France’s CAC 40 index added 0.1 percent, Germany’s DAX index rose 0.5 percent, while the UK’s FTSE 100 Index advanced 0.9 percent.

While the Bank of England stood pat on monetary policy, as expected, it suggested it might cut rates again later this year.

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