US indexes tick higher as Apple surges and banks climb

By Canadian Press DataFile

U.S. stock indexes are edging higher Wednesday morning as investors cheer Apple’s latest quarterly report, which included strong iPhone sales and a forecast that was better than expected. Private payroll processor ADP said private businesses added 219,000 jobs in July, a strong economic signal that sent bond yields higher. The yield on the 10-year Treasury note rose above 3 per cent for the first time in three months.

KEEPING SCORE: The S&P 500 index added 4 points, or 0.2 per cent, to 2,820 as of 10 a.m. eastern time. The Dow Jones Industrial Average edged up 19 points, or 0.1 per cent, to 25,434. The Nasdaq composite climbed 42 points, or 0.6 per cent, to 7,714.

The Russell 2000 index of smaller-company stocks was little changed at 1,671. Most of the stocks on the New York Stock Exchange traded lower.

The S&P 500 index rose 3.6 per cent in July in spite of the trade war between the U.S. and China. The markets have gotten a lift from strong company earnings as well as efforts by the U.S. and European Union to resolve their trade differences, which have also led to import taxes.

JOBS SURVEY: ADP said hiring picked up in June, suggesting employers are still able to find the workers they need despite the low unemployment rate. The survey showed strong hiring by health care providers, hotels and restaurants and manufacturers. The federal government will release a jobs report Friday that covers hiring by private and public employers.

Bond prices sank. The yield on the 10-year Treasury note rose to 3 per cent from 2.96 per cent.

The increase in bond yields benefited bank stocks. Higher yields force interest rates on mortgages and other loans higher, making it more profitable for banks to lend money. Bank of America jumped 1.8 per cent to $31.45 and Citigroup rallied 1.2 per cent to $72.78.

APPLE EARNINGS: Apple said the average selling price for the iPhone jumped 20 per cent in its latest quarter and its third-quarter profit and sales both surpassed analyst projections. Apple’s third fiscal quarter is usually its weakest. The company’s fourth-quarter revenue forecast also topped Wall Street estimates.

Apple surged 4.5 per cent to $198.74. That put the most valuable publicly traded U.S. company on track to set another all-time high. Market watchers have also been wondering if Apple will soon become the first company to surpass $1 trillion in value. It’s currently at about $976 billion.

BURNING THROUGH EARNINGS: Soda Stream jumped 22.9 per cent to $107.34 after the maker of beverage carbonation systems raised its annual forecasts following a strong quarterly report. Cheesecake Factory said higher insurance and legal costs hurt its earnings and the stock fell 14 per cent to $48.17.

Clothing maker Hanesbrands plunged 17.4 per cent to $18.38 after it posted a smaller-than-expected profit and said Target won’t renew a contract for an exclusive line of Champion clothing when the deal expires in January 2020. Big Five Sporting Goods dropped 11.2 per cent to $5.73 after it said sales weakened at the end of its second quarter as bad weather hurt sales of camping and water sports items.

Medicaid services company Molina Healthcare surged 16.6 per cent to $121.41 and music streaming company Pandora added to its big rally this year as it gained 22.3 per cent to $8.24.

TRADE QUESTIONS: Bloomberg News reported that the Trump administration is considering a 25 per cent tax on $200 billion in imports from China, above the 10 per cent the administration has been considering. China says it will retaliate if that happens. A day earlier, stocks got a boost from a report the two sides were hoping to hold more talks to resolve the trade war. Both countries put tariffs on $34 billion in goods in early July.

FED AHEAD: The Federal Reserve will wrap up its latest meeting Wednesday afternoon. Investors don’t expect it to raise interest rates, but it’s widely expected to boost rates again in September and the Fed has said it intends to raise rates one more time later in the year.

ENERGY: Benchmark U.S. crude dropped 1.6 per cent to $67.63 per barrel in New York. Brent crude, used to price international oils, fell 1.7 per cent to $72.95 per barrel in London.

CURRENCIES: The dollar rose to 111.89 yen from 111.83 yen. The euro fell to $1.1680 from $1.1697.

OVERSEAS: Britain’sFTSE 100 dropped 1 per cent and Germany’s DAX fell 0.5 per cent 795. The French CAC 40 dipped 0.1 per cent.

Japan’s Nikkei 225 index rose 0.9 per cent and South Korea’s Kospi added 0.5 per cent. In Hong Kong, the Hang Seng index dropped 0.9 per cent.

 

This article provided by NewsEdge.