While you were sleeping: Eyes on Apple, Fed

Wednesday 28th October 2015

Wall Street moved lower as the US Federal Reserve began a two-day policy meeting, and as investors awaited the latest earnings from Apple.

In New York trading at about 1.43pm, the Dow Jones industrial average fell 0.3 percent, while the Standard & Poor’s 500 Index shed 0.6 percent, and the Nasdaq Composite Index declined 0.5 percent.

Shares of Apple, which is set to report its latest results after the market close, last traded unchanged from the previous day’s close at US$115.28. Also reporting after the close are Twitter and Gilead Sciences.

"I think it's a day where the market is going to metaphorically hold its breath and wait for both Apple's results and what the Fed is going to do," Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh, told Reuters.

Few expect the Federal Open Market Committee to lift interest rates during the gathering that ends on Wednesday. Investors will eye any clues on the timing of a hike, especially if a potential 2015 increase remains on the table.

Stocks surged last week on pledges for additional stimulus by the European Central Bank and a rate cut from the People’s Bank of China.

“Last week’s rally was driven by central banks, so everybody is waiting to see what the Fed has to offer,” Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany, told Bloomberg. “I don’t think they’ll give us much at all, but nobody wants to be caught on the wrong side. With no press conference, it will be a case of reading between the lines to interpret their statement.”

The latest US economic data were lacklustre. A Commerce Department report showed orders for durable goods dropped 1.2 percent in September, after a downwardly revised 3 percent slide in August. Separately, a Conference Board report showed its consumer sentiment index dropped to 97.6 in October, down from a 102.6 in September.

Declines in shares of Chevron and those of IBM, down 2 percent and 1.5 percent respectively led the Dow lower. Chevron, as well as shares of Exxon Mobil, moved lower with the price of oil amid concern about global oversupply.

“It is going to be difficult to turn more positive on the energy sector until we see depressed and declining trends in profitability turn around more visibly, trends that have been in place since long before last year’s collapse in oil prices,” William Hobbs, head of investment strategy at Barclays’ wealth-management unit in London, told Bloomberg.

“Commodity prices have been softer and these stocks haven’t participated in the rally as much as other sectors either,” Hobbs added.

In Europe, the Stoxx 600 Index finished the day with a 1.1 percent slide from the previous close. The UK’s FTSE 100 Index dropped 0.8 percent, while France’s CAC 40 Index and Germany’s DAX Index each decreased 1 percent.

BusinessDesk.co.nz

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