Stocks mixed after six-day climb; Treasuries, oil rise
Traders work on the floor of the New York Stock Exchange August 28, 2013. REUTERS-Brendan McDermid
By Ellen Freilich
NEW YORK | Wed Sep 11, 2013 11:55am EDT
(Reuters) - U.S. stocks were mostly lower on Wednesday, as a slide in Apple weighed on the technology sector, while the dollar rose to a near seven-week peak against the yen and oil prices were slightly higher as tensions over Syria eased.
The reduced fears over Syria, after President Barack Obama pledged Tuesday to explore a diplomatic plan by Russia to take away Syria's chemical weapons, also drove gold to a three-week low.
Jitters over Syria remained, however, and Obama voiced skepticism about Russia's plan and sought support for using force should diplomacy fail.
"That is going to cause a little bit of angst, it won't cause the market to implode. The only reason that would happen is if these diplomatic efforts fail once again and the prospect of a real strike looms large again," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York.
The Federal Reserve's highly anticipated policy meeting next week kept trading in check, with currency and the U.S. government debt markets keenly awaiting whether the Fed will begin to reduce its bond-buying program.
The unwinding of hedges set ahead of Verizon Communications Inc's (VZ.N) record-breaking $49 billion corporate bond deal helped support Treasuries prices. Verizon launched the deal to partly finance its $130 billion buyout of its wireless operations Verizon Wireless from Vodafone, setting a new record for the largest ever corporate bond.
"The sheer size of this deal is impressive in and of itself," said Bonnie Baha, who heads Global Developed Credit at DoubleLine.
"It just goes to show that despite the specter of higher Treasury rates going forward, investor demand remains for attractively priced corporate credit deals."
Underwriters of the Verizon deal exited hedges that they had put on in the last couple of days, undertaken to offset their exposure to the massive Verizon offering, supporting Treasuries prices.
On Wall Street, Apple Inc's (AAPL.O) shares were down about 5.7 percent one day after it unveiled a high-end iPhone with a fingerprint scanner as well as a cheaper model targeted at emerging markets.
The price of the lower-end iPhone was higher than expected and raised concerns the company was not fighting hard enough against Google Inc's (GOOG.O) market-dominating Android operating system. Three brokerages downgraded their ratings on Apple shares.
The retreat in Apple shares weighed heavily on the Nasdaq Composite .IXIC, which dropped 17.468 points, or 0.47 percent, to 3,711.554. The S&P 500 .SPX lost 3.29 points, or 0.2 percent, to 1,680.7. The Dow Jones industrial average .DJI bucked the trend, rising 43.1 points, or 0.28 percent, to 15,234.16.
Globally, MSCI's 45-country world index .MIWD00000PUS rose 0.24 percent.
U.S. Treasuries yields fell as stocks declined, and ahead of the Treasury's sales of $21 billion in 10-year notes, the second sale in $65 billion worth of new supply this week.
Benchmark 10-year notes rose 4/32 in price. Their yields eased to 2.96 percent from 2.97 percent on Tuesday and a two-year high of 3.01 percent on Friday.
Oil recovered some ground with Brent crude at $111.55, above a 2-1/2-week trough of $110.59. The steadier performance came after a 4 percent drop in the past two sessions, its largest two-day fall since June.
Gold inched back up to $1,361.71 an ounce having slid to a three-week low of $1,356.85.
In Europe, Britain's unemployment rate dipped to its lowest level since late 2012 in the latest sign its economy is picking up.
Sterling rose to a seven-month high against both the dollar and the euro, and to a four-year high against the weakened Japanese yen, on the view the Bank of England might raise rates sooner than heretofore expected.
The FTSEurofirst 300 .FTEU3 pan-European share index stood 0.53 percent higher.
Benchmark German government bonds tracked minor gains by U.S. Treasuries.
Italy's benchmark yields rose above Spain's for the first time in 18 months amid concern about political instability and about Italy's banks before an examination of all euro zone banks by the European Central Bank in coming months.
Rome sold 11.5 billion euros of treasury bills at its highest rate in over nine months.
YEN HOVERS NEAR LOWS
The yen hovered near recent lows as the easing tensions over Syria dented demand for the safe-haven Japanese currency, while uncertainty about the Federal Reserve's stimulus plan kept the dollar range-bound.
The yen hit a seven-week low against the dollar and a 3-1/2-month trough versus the euro, before recovering losses.
Traders said uncertainty about Syria and the Fed could keep major currencies in a range. The U.S. central bank meets next Tuesday and Wednesday and investors will look for details on the pace and timing of the central bank's plans to scale back its bond buying program.
"Until we can get through that meeting and see what the Fed says, we're expecting continued consolidation here," said Eric Viloria, currency strategist at Forex.com.
The dollar was last down 0.33 percent at 100.07 yen, according to Reuters data. Analysts said the dollar would likely hold above the 100 yen level in coming sessions.
The euro was down 0.14 percent at 133.07 yen, having hit a an intra-day peak of 133.36 yen, its highest since May 22.
(Additional reporting by Rodrigo Campos, Wanfeng Zhou, Karen Brettell, Eileen Soreng and Neha Alawadhi in New York and Marc Jones in London; Editing by Leslie Adler)
