U.S. Stocks Slump As Apple Earnings Disappoint

(Sundiata Finance) – U.S. stocks traded lower on Wednesday, in part weighed down by an earnings-driven drop for Apple Inc., the world’s largest company by market value.

Moves come ahead of the Federal Reserve’s closely watched policy update due 2 p.m. Eastern.

The S&P 500 index SPX, -0.26% fell 6 points, or 0.3%, to 2,384. Technology losses, down 0.5%, led the broad-market index’s 11 sectors lower. The largest component on the index, Apple AAPL, -0.20%  was down 1.6% after revenues disappointed investors.

“We are seeing a little bit of weakness this morning, partly because of Apple, but partly because of the fact that the index has failed to break out higher. In fact, over the past five sessions, the index has traded in the tightest range since 1984,” said Mike Antonelli, equity sales trader at Robert W. Baird & Co.

“This is the reason why the Vix is so low,” he added.

The measure of implied volatility on the S&P 500, CBOE Volatility index VIX, +2.46%  is at 10.72, lowest level this year.

The Dow Jones Industrial Average DJIA, -0.08%  shed 42 points, or 0.2%, to 20,903. The Nasdaq Composite COMP, -0.50% retreated slightly from its record close set on Tuesday, after falling 22 points, or 0.4%, to 6,073.

Apple late Tuesday reported earnings that beat expectations and raised its dividend, but “traders appear to be focusing more on sales results and sales guidance that fell short of expectations,” said Colin Cieszynski, chief market strategist at CMC Markets, in a note.

Apple’s stock had rallied into the earnings report, gaining a total of 2.7% in Monday and Tuesday’s sessions. Shares have risen 25% since January, topping the S&P 500’s year-to-date gain of 6.5%.

Read: Apple’s stock falls after iPhone maker’s revenue, guidance miss forecasts

And see: Apple’s troubling ‘pause’ in iPhone sales? Bullish analysts say it’s a good thing

Market reaction to private-sector jobs data was muted. Private-sector employment slowed down in April as employers added 177,000 jobs, ADP reported Wednesday, down from a revised 255,000 jobs created in March.

The Fed is expected to keep rates on hold, but investors will scrutinize the accompanying statement for clues about future rate increases.

 

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