Yesterday’s bounce in share prices saw the S&P 500 make its biggest advance for a month, but those gains have been given back with interest today, as Wall Street suffers huge slides on the back of a variety of concerns.
By Peter Martin
Thursday, September 25, 2014
Tech goliath Apple ($AAPL) tumbled more than 3%, one of its biggest falls of the year, after the company pulled the release of its latest iOS update. The iPhone maker has also been hit by accusations from some customers that the new iPhone 6 Plus may bend if kept in a tight pocket for an extended period.
Apple’s fall was in line with the negative overall sentiment that has plagued global stock markets today. By early afternoon in New York, the S&P 500 Index was down 1.40% or 28 points, fast receding from the lofty 2000-mark, to stand at 1970.0. The tech-heavy NASDAQ 100, which also shares Apple as a heavily-weighted component, was subject to even more extreme losses, plunging 81.8 points to 4012.6, a drop of 2%.
The Dow Jones Industrial Average slid 230 points or 1.34% to 16,979, giving up the symbolic high ground above the 17,000 level.
The risk-off sentiment of the day is rooted in fears that combine speculation that major central banks could soon initiate a phase of tightening and reports that Russia could be set to introduce legislation that would allow the government to seize foreign assets.
The Bank of England’s governor Mark Carney said in a speech today that improvements in the UK’s economy mean that a rate hike is drawing closer. ‘With many of the conditions for the economy to normalise now met,’ he said, ‘The point at which interest rates also begin to normalise is getting closer.’ Two out of the nine members of the Bank of England’s Monetary Policy Committee voted for a rate rise of 25 basis points at both the August and September MPC meetings, though the consensus estimate amongst analysts is for no rise until early in 2015 — minutes from the last meeting reveal a majority concern that hiking rates too soon might threaten the economic recovery. The next MPC meeting is on October 9.
Some see the Fed as being further ahead of the curve than the Bank of England in terms of proximity to tightening. The Fed has signalled it will likely wind down its stimulus program at the next FOMC meeting, a pre-requisite on the path to less accommodative policy, though the Fed continues to assert it will maintain its current target range for the federal funds rate for some considerable time, inflation permitting.
Jobless claims data released today showed the number of first-time claimants rose by 12,000 last week to 293,000, a more positive result than expected. The four-week moving average improved to 298,500 from 299,750, and shows a similar level of improvement in comparison to how things were looking a month ago.
A draft law was submitted to Russia’s parliament yesterday that would allow the seizure of foreign state assets in Russian territory in order to provide compensation for Russian citizens who are subject to sanctions. Should the draft be approved and signed into law, it would be a further retaliation by Moscow against measures introduced by the US and Europe in response to the Ukraine crisis and raises fears that the economic fallout from the standoff between the Kremlin and Western powers could worsen.
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.