Brief Apple rally fails to lift stocks

After some short-lived enthusiasm, Apple’s much-anticipated multiple product launch on Tuesday failed to lift the company’s own shares at the close, never mind the U.S. stock market at large.

AAPL jumped more than 5% in the 1:00-2:00 hour as the company was introducing two larger versions of the iPhone, a line of Internet-connected watches and a new mobile payments system – not to mention a new album by U2 available for free on iTunes. But it fell just as abruptly, ending the day down 0.4%, losing all of its gains, and then some, in the last two hours of trading. The stock was easily the day’s most heavily traded issue, with more than 180 million shares trading, more than double that of second-place Bank of America.

The brief but steep rally in Apple shares had a positive effect on stocks in general, but the gains were fleeting there, too. Both the Dow and the S&P 500 traded in the red all day, both finishing with 0.6% losses. Tech and small-cap stocks did worse on the day, with NASDAQ falling 0.9% after briefly nudging into positive territory in line with the rally in Apple. The Russell 2000 fell 1.2%. Indeed, the vast majority of stocks were lower on the day, with all 10 S&P sectors losing ground along with 85 of the NASDAQ 100. In the overall market, losing stocks trounced gainers by about a three-to-one margin.

Spanish stocks and sovereign bonds dropped sharply on concern that the country has its own Scottish-type problem. The IBEX 35 equity index fell 1.4% while yields on the country’s 10-year government bonds jumped 11 basis points on concern that voters in the Catalonia region will vote to secede at a referendum on November 18. The Catalonia issue has gotten renewed attention in light of recent polls that show Scottish voters leaning toward voting to secede from the United Kingdom on September 18, which has unnerved investors there. Stocks and bonds were both lower in price throughout Europe on Tuesday although the declines in Spain were steeper. The Stoxx Europe 600, for example, fell 0.4% while German and French stocks fell 0.5%. Yields on 10-year German and Italian bonds rose four and seven bps, respectively, the German bund rising to an even 1.00%.

Asian markets were mixed. Japan’s Nikkei 225 rose 0.3% while India’s Sensex fell 0.2%. The Shanghai composite eked out a fractional gain to keep its winning streak alive at seven; the index is up 6% during that time. Hong Kong and South Korean markets were closed for holidays.

Reports/dates/facts/links worth paying attention to over the next week:

  1. September 10: U.S. wholesale trade (July).
  2. September 11: U.S. weekly jobless claims; U.S. Treasury monthly statement (August).
  3. September 12: U.S. retail sales (September); UofM/Reuters consumer sentiment report (mid-September); China industrial production (August).

Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.

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