While you were sleeping: Apple bites into sentiment

Friday 13th May 2016

Wall Street was mixed as a slide in Apple shares amid concern that the company is preparing for slower sales of its iconic iPhone offset gains in Nike and Microsoft.

In 2.40pm New York trading, the Dow Jones Industrial Average added 0.2 percent. The Nasdaq Composite Index fell 0.4 percent. In 2.25pm trading, the Standard & Poor’s 500 Index gained 0.1 percent.

The Dow advanced as gains in shares of Nike and those of Microsoft, recently trading 2.1 percent and 1.2 percent stronger respectively, outweighed slides in shares of Apple and those of General Electric, last 2.3 percent and 0.7 percent lower respectively.

Shares of Apple dropped to the lowest level in two years amid concern about the appeal of its latest iPhone, expected to be launched later this year.

"People are getting negative data points about component orders and production forecasts, and the features on the new iPhone do not seem to be a big change from the 6S," Rosenblatt Securities analyst Jun Zhang told Reuters.

While a Labor Department report showed that initial jobless claims unexpectedly rose last week, increasing by 20,000 to 294,000, analysts said it was not a sign of a weakening jobs market.

"We have to look past the noise in the latest jobless claims number because it was likely influenced by the Verizon strike," Jacob Oubina, senior US economist at RBC Capital Markets in New York, told Reuters. “The broader underlying trend in claims remains very constructive.”

Indeed, while a majority of economists in a Reuters survey said they expect the Federal Reserve to wait until September before raising interest rates again, almost a third of more than those 90 economists in the poll still expect the Fed will hike its federal funds rate to 0.50-0.75 percent in June.

"It is not that a June rate hike is off the table entirely, but again, we would need to see some fairly strong data between now and the June FOMC (Federal Open Market Committee) meeting," Sam Bullard, senior economist at Wells Fargo, told Reuters.

Monsanto shares jumped on a Bloomberg report that Bayer is considering a bid for its US rival in a deal that would create the world’s largest supplier of seeds and farm chemicals.

The German firm has held preliminary discussions internally and with advisers about buying Monsanto, Bloomberg reported, citing people familiar with the matter. Bayer has discussed how to finance a deal including potential asset sales, according to Bloomberg, citing the people, who asked not to be named because the deliberations are private.

No final decision has been made and the Leverkusen-based company could decide against a bid or pursue other transactions with Monsanto, including joint ventures or asset sales, the people told Bloomberg.

Monsanto shares traded 8.2 percent higher at US$97.77 as of 2.41pm in New York after rising as high as US$100.85 earlier in the session.

Shares of Bayer closed 4.3 percent lower in Frankfurt.

Europe’s Stoxx 600 Index finished the day with a 0.5 percent retreat from the previous close. France’s CAC 40 index declined 0.5 percent, the UK’s FTSE 100 index dropped 1 percent, while Germany’s DAX index shed 1.1 percent.

“A mixed set of results from companies delivered against lowered expectations is not helping the markets,” Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland, told Bloomberg. “The real trigger the market needs right now is improvement in global growth prospects and it doesn’t feel like that is happening.”

BusinessDesk.co.nz

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