U.S. Stocks Fluctuate as Apple Plunges Amid Syria Delay
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Inyoung Hwang & Nikolaj Gammeltoft - Sep 12, 2013 12:00 AM GMT+0800</cite>
U.S. stocks fluctuated, following a six-day win streak for the Standard & Poor’s 500 Index, as diminishing concern over Syria offset Apple Inc.’s biggest decline since April.
Apple plunged 5.9 percent as the price of its new lower-cost iPhone disappointed analysts. International Business Machines Corp. surged 2 percent after agreeing to sell its customer-care outsourcing business to Synnex Corp. (SNX) for $505 million. Marriott International Inc. increased 2.8 percent after a Chinese land developer said he wants to buy hotel-management companies in the U.S.
The S&P 500 rose 0.1 percent to 1,685.38 at 11:59 a.m. in New York, erasing an earlier loss of 0.3 percent. The Dow Jones Industrial Average, which does not include Apple, (AAPL)jumped 86.38 points, or 0.6 percent, to 15,280.68, the highest since Aug. 15. Trading in S&P 500 stocks was 3.1 percent above the 30-day average at this time of day.
“We’re not out of the woods on news from Syria yet, but for the time being the market has digested the decision to delay action,” Russell Croft, who helps manage $900 million as a Croft-Leominster Inc. fund manager in Baltimore, said by phone. “Right now all eyes are on next week’s Fed meeting, that’ll be the big driver in the market with a few data points between now and then.”
The S&P 500 advanced 3.1 percent so far in September through yesterday as reports showed China’s economy has strengthened, while concern abated that the U.S. will soon bomb Syria.
Syria Debate
President Barack Obama said last night in an address fromWashington that he will pursue a proposal by Russia for Syria to surrender its stockpiles of chemical weapons to international authorities. He had said he would ask Congress to authorize the use of military force against President Bashar al-Assad’s regime following a suspected chemical-weapons attack on Aug. 21 that the U.S. says killed more than 1,400 people.
The tensions over Syria have recently overshadowed investor concern that the Federal Reservewill pare back its record stimulus following its Sept. 17-18 meeting. The central bank is watching economic data as it considers reducing the monthly $85 billion in asset buying.
Economists estimate the Fed this month will taper its monthly bond buying by $10 billion, to $75 billion, according to the median of 34 responses in a Bloomberg News survey. The stimulus has helped the S&P 500 rally as much as 153 percent since the beginning of the bull market in March 2009.
Diminished Risks
“The downside risk from Syria diminished and that explains the recent rise in risk assets,” Stewart Richardson, who helps oversee about $100 million as chief investment officer at RMG Wealth Management LLP in London, said by telephone. “That was helped by the better-than-expected data in China. Some of the equity markets, especially emerging markets, were probably oversold and enjoyed a bit of a bounce. Some markets are up several days in a row.”
The Chicago Board Options Exchange Volatility Index (VIX), or VIX, dropped 3.3 percent to 14.05. The equity volatility gauge is down 17 percent in September after rallying 26 percent in August, the biggest monthly gain since May 2012.
Seven of 10 industries in the S&P 500 advanced, with health-care and phone stocks rising at least 0.4 percent to pace gains. Utilities and technology companies slumped the most, losing more than 0.6 percent.
Apple Rout
Apple dragged technology shares lower, dropping 5.9 percent to $465.30 for its biggest slide since April. The company introduced two models of its iPhone yesterday and was cut to neutral from buy at Bank of America Corp., which said that the lower-cost smartphone cost too much to increase sales in emerging markets.
Credit Suisse Group AG lowered the Cupertino, California-based company to neutral from outperform, UBS AG cut its rating on the stock to neutral from buy and Piper Jaffray Cos. lowered its 12-month price target on Apple’s shares to $640 from $655.
IBM rallied 2 percent to $190.32 for the biggest gain in the Dow. The world’s largest computer-services provider agreed to sell the unit to Synnex to focus on more profitable investments. IBM is the largest Dow component by index weight.
Marriott International added 2.8 percent to $42.78, the biggest advance in the S&P 500. (SPX)Wang Jianlin, China’s richest man and the owner of the country’s biggest commercial land developer, said he has hired two investment banks to buy hotel-management companies.
Bond Sale
Verizon Communications Inc. rose 0.1 percent to $46.51. The second-biggest U.S. telephone carrier began selling today $45 billion to $49 billion of bonds, more than twice the size of Apple’s unprecedented $17 billion issue in April, according to data compiled by Bloomberg. The company is raising money for its $130 billion acquisition of Vodafone Group Plc’s stake inVerizon Wireless.
The S&P 500 traded yesterday above its 150-day moving average for the 200th straight session. That’s the sixth longest streak since 1980 and the longest since 2004, according to Miller Tabak & Co.’s Jonathan Krinsky.
“We are in the midst of one of the greatest and steady bull markets we have seen in recent history,” the technical analyst wrote in a note today. “Eventually it will end. Until then, however, enjoy the ride.”
The index has rallied 21 percent through yesterday from the last time it traded below the trend line on Nov. 20, 2012.
In five prior instances, after crossing the 200-day mark, further gains were “rather limited” during four runs, while in the 1995-1996 streak, the S&P 500 rose another 15 percent, Krinsky wrote.
To contact the reporters on this story: Inyoung Hwang in London at [email protected]; Nikolaj Gammeltoft in New York at [email protected]
To contact the editor responsible for this story: Lynn Thomasson [email protected]
