The drop in the level of the stock market continued on Tuesday following Monday’s sell-off, with the Dow Jones Industrial Average retreating 0.42% or 71 points to 17,039 by early afternoon in New York. The S&P 500 slid the same percentage to 1993.1.
By Peter Martin
Tuesday, September 9, 2014
One high-profile stock moving the other way was Apple ($AAPL), which gained more than 1% after announcing a batch of new devices. Apple unveiled the latest iterations of the iPhone today at an official launch event in Cupertino, California, the success or failure of which will no doubt have a large say in the company’s fortunes (more than half of Apple’s revenues coming from the hugely popular smartphone). The new iPhone 6 and oversized iPhone 6 Plus feature the usual evolutionary advances such as faster processors, higher screen resolutions and thinner dimensions, but what is creating additional buzz in the market is the introduction of the Apple Watch — the first addition to Apple’s product line since the introduction of the iPad. The watch is not a standalone device and will require an iPhone to function. GPS-device manufacturer Garmin ($GRMN) slipped 4.5% in the wake of the announcement of the Apple Watch.
The Fed meets next week for the Federal Open Markets Committee (FOMC) meeting, the first since July. The committee has decided to reduce its monthly asset purchases by a total of $10 billion (consisting of a $5 billion reduction in the purchase of mortgage-backed securities and a $5 billion reduction in the purchase of longer-term Treasury securities) at each meeting this year since, trimming the size of its stimulus from $65 billion in asset purchases per month in the New Year to its current level of $25 billion per month. There has been nothing in labor or inflation data to suggest the Fed is likely to diverge from this pattern of reductions, meaning an end to stimulus is likely to be announced before the end of the year. This is naturally leading investors to question how soon the Fed will go a step further and begin to hike interest rates. That speculation is feeding into the more cautious behaviour on Wall Street that we have seen so far this week, though stocks remain not too far from all-time highs.
Speculation that the Fed is further ahead in the curve than other major central banks in terms of returning to normal monetary policy has also contributed to dollar strength today. USD/JPY climbed 0.28% to 106.32 by mid-afternoon in New York, while GBP/USD slipped 0.09% to 1.6090.
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.