Stocks rise; iPhone disappointment hurts Apple
Investors decided the risk of a conflict with Syria is shrinking and sent stock prices higher.
The Dow Jones industrial average rose 135.54 points, or 0.9 percent, to 15,326.60 on Wednesday. A big decline in Apple and other technology companies held back the Standard & Poor’s 500 index and the Nasdaq composite. The S&P 500 managed a small gain, its seventh in a row.
U.S. and Russian diplomats are working on a plan that would lead to Syria giving up chemical weapons that President Barack Obama says were used against civilians. Obama said the United States will explore a possible diplomatic solution, though the U.S. military remains ready to attack.
After a tough August, stocks have been rising in September. The S&P 500 is up 3.4 percent so far this month. Since September began, a U.S. strike on Syria has gone from seeming imminent to being something that may or may not ever happen.
The S&P 500 edged up 5.14 points, or 0.3 percent, to 1,689.13. The Nasdaq composite fell 4.01 points, or 0.1 percent, to 3,725.01.
Disappointment over Apple’s new iPhone lineup dragged down tech stocks. The two S&P 500 stocks with the biggest declines were Apple and the 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 to buy the new model. 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 bigger market share, 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 fell $26.93, or 5.4 percent, at $467.71. Apple stock fell on Tuesday, too, after rising 11 percent in the month leading up to the announcement.
Qualcomm fell $2, or 2.9 percent, to $68.09. Apple makes up some 15 percent of Qualcomm revenue, Lam estimates. Supplier Cirrus Logic Inc. fell $1.20, or 5.2 percent, to $21.89.
Utilities and tech were the only two industry sectors in the S&P 500 that fell. The other eight rose, led by energy stocks.
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 $9.02, or 11.9 percent, to $67.04 after reporting second-quarter sales that were not as strong as in the first quarter.
• Disney rose $1.11, or 1.8 percent, to $63.94 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 $4.10, or 2.2 percent, to $190.70 after saying it would sell a customer care outsourcing business to Synnex for $505 million in cash and stock. Synnex soared $9.62, or 20 percent, to $57.59.
Oil prices rose 17 cents to close at $107.56 after two days of declines. Gold fell 20 cents to $1,363.80.
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 99.86 Japanese yen.