Tags: Wall Street

Stocks Mostly Rise; Apple Sinks after IPhone News

Wednesday, 11 September 2013 04:20 PM

Stocks mostly rose on Wednesday as investors waited to see if the confrontation with Syria can be resolved peacefully.

In afternoon trading, the Dow Jones industrial average was up 104 points, or 0.7 percent, at 15,295.

A big decline in Apple and other tech companies prevented similar gains for the Standard & Poor's 500 index and the Nasdaq composite.

The S&P 500 edged up three points, or 0.2 percent, to 1,687, and the Nasdaq was down seven points, or 0.2 percent, at 3,722.

After a tough August, stocks have risen in recent days, including six days in a row of gains for the S&P 500. During that time, a U.S. strike on Syria has gone from seeming imminent to being something that may or may not ever happen. Although President Barack Obama is still making the case for military action, the U.S. is also considering a proposal that would have Syria hand over its chemical weapons, defusing the crisis.

The risk that a confrontation with Syria could spread means most investors would be happy if the U.S. doesn't act, said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. "Markets are much more happy when they don't have to deal with that particular risk," he said.

Disappointment in Apple's new iPhone lineup dragged down tech stocks. The two S&P 500 stocks with the biggest declines were Apple and chip supplier Qualcomm, which makes the radio chip used in previous iPhones and is expected to make the chip used in the new iPhones, too.

Apple's new iPhones struck many as only a modest advance from previous models. Investors fretted that Apple is offering the phone's new operating system for free to people who already own older iPhones, removing an incentive for those people to buy a new one. Also, some analysts felt that Apple's lowest-priced iPhone — $549 without a two-year cell phone contract — isn't cheap enough to win many buyers in emerging markets.

There was a broad expectation that Apple would cut prices more and go for a bigger market, said Wayne Lam, an analyst for IHS iSuppli, which tracks components used in electronics. Instead, they stuck with their business model of avoiding cheap versions of its products.

"It's a proven business model, and good for them, but I think the expectation is that Apple is losing market share and they're not innovating," he said.

Apple was down $24.89, or 5 percent, at $469.80. Apple stock fell on Tuesday, too, after rising 11 percent in the month leading up to the announcement.

Qualcomm fell $2.35, or 3.4 percent, to $67.74. Apple makes up some 15 percent of Qualcomm revenue, Lam estimates. Supplier Cirrus Logic Inc. fell $1.32, or 5.7 percent, to $21.78.

Tech stocks had the biggest declines of the 10 industry groups in the S&P 500. Eight other categories rose.

Traders on the floor of the New York Stock Exchange observed a moment of silence shortly before trading began on the 12th anniversary of the Sept. 11 terrorist attacks.

Other companies making big moves included:

— Restoration Hardware, down $6.33, or 8.3 percent, to $69.71 after reporting second-quarter sales that were not as strong as the first quarter.

— Disney rose 97 cents, or 1.5 percent, to $63.80 after delaying its fifth "Pirates of the Caribbean" movie from a planned 2015 opening. Studios struggled with big-budget flops this summer, including Disney's "The Lone Ranger," and investors may be glad that it will take its time with the "Pirates" sequel.

— IBM rose $4.01, or 2 percent, to $190.60 after it said it would sell a customer care outsourcing business to Synnex for $505 million in cash and stock. Synnex rose $10.12, or 21 percent, to $58.09.

Oil prices rose 23 cents to $107.63 after two days of declines. Gold rose 40 cents to 1,364.40.

The yield on the 10-year Treasury note fell to 2.92 percent from 2.97 percent a day earlier.

The dollar weakened slightly to 1.33 euro and 100.01 Japanese yen.

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Wednesday, 11 September 2013 04:20 PM
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