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GLOBAL MARKETS-Apple weighs on equities, dollar up before Fed decision
May 3, 2017 / 3:49 PM / 5 months ago

GLOBAL MARKETS-Apple weighs on equities, dollar up before Fed decision

* Main European markets dip

* Apple drags Wall St lower after iPhone sales dip

* Fed statement eyed for signal of June rate hike (Updates with U.S. market open, changes byline, dateline; previous LONDON)

By Chuck Mikolajczak

NEW YORK, May 3 (Reuters) - World stock markets fell on Wednesday as declines in iPhone sales brought about some concern about consumer strength, while the dollar edged higher before a U.S. central bank statement that may hint towards a rate hike next month.

Apple Inc lost 0.9 percent as the biggest drag on the S&P 500 after it reported a surprise fall in iPhone sales in its fiscal second quarter on Tuesday. The drop came on the heels of a decline in sales for U.S. automakers for April and a soft first-quarter reading on U.S. growth last week.

Even with the decline, Apple still managed to top earnings estimates in what has been a strong quarter for U.S. companies. Thomson Reuters data shows first-quarter growth is currently expected to be 14.2 percent, the best quarter since 2011, with 357 of S&P 500 companies having reported.

“Think about the mixed message you had in the first quarter – GDP light, monthly auto sales light, iPhone sales light, so you’ve got extraneous negative data,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“The first quarter is a blockbuster quarter for earnings on balance, which doesn’t necessarily line up with some of the incremental pieces of economic data that we’ve seen. That is the hard part to rationalize.”

A report by payrolls processor ADP said private employers expanded their payrolls by 177,000 jobs last month, the smallest gain since the 62,000 increase last October as they faced increasing difficulty finding qualified workers.

Other data indicated the pace of growth in the U.S. economy’s service sector increased in April, led by a jump in new orders, according to an industry report.

The Dow Jones Industrial Average fell 34.45 points, or 0.16 percent, to 20,915.44, the S&P 500 lost 7.26 points, or 0.30 percent, to 2,383.91 and the Nasdaq Composite dropped 30.67 points, or 0.5 percent, to 6,064.70.

Europe’s STOXX 600 index lost 0.11 percent to retreat from a 20-month high and MSCI’s gauge of stocks across the globe shed 0.26 percent.

The U.S. economic data helped push the dollar higher ahead of the Federal Reserve statement.

While the central bank is expected to leave rates unchanged later today, investors will look for signs the it may hike in June. Traders are currently pricing in a 70.7-percent chance of a hike of at least a quarter-point next month, according to CME’s FedWatch tool.

The dollar index rose 0.11 percent, with the euro down 0.13 percent to $1.0913.

Benchmark 10-year notes last rose 1/32 in price to yield 2.2946 percent, from 2.296 percent late on Tuesday.

The U.S. Treasury said on Wednesday it is studying the possibility of issuing ultra long-term bonds.

Oil prices rebounded from near 2017 lows after preliminary data showed a much larger-than-expected fall in U.S. crude stocks, reviving bullish sentiment about easing oversupply.

U.S. crude fell 0.13 percent to $47.60 per barrel and Brent was last at $50.48, up 0.04 percent on the day.

Reporting by Chuck Mikolajczak; Editing by Nick Zieminski

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