The stock market finished a positive week on a mixed note. The S&P 500 fell less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average was up 0.1% on the day and 1.7% for the week. The NASDAQ fell 0.3%. Overall, the Dow Jones advanced 13.75 points to close at 17,279.74, the NASDAQ declined 13.64 points to close at 4,579.79 and the S&P 500 dropped 0.96 points to close at 2,010.40.
Market indices displayed strength in early trading on Friday with the S&P 500 tagging the 2,019 level during the opening 30 minutes of trade. However, that represented the high end for the benchmark index, which returned to its flat line by the close.
The early advance followed the failed independence referendum in Scotland, which averted a potential storm in the financial markets. Once the uncertainty was cast aside, participants directed their focus to the IPO of Alibaba Group, which represented the largest public debut to date. Shares of Alibaba opened at $92.70 after pricing at $68 per share, but could not settle above the opening print. Alibaba followed a similar pattern as the broader market with the latter being weighed down by influential sectors like financials (down 0.3%), technology (down 0.4%), and industrials (declining 0.1%).
Despite today's underperformance, the financial sector finished the week among the leaders with a solid gain of 1.5% since last Friday. Meanwhile, the technology sector lagged since the open following disappointing quarterly results from Oracle. The stock tumbled 4.2% in reaction to below-consensus earnings/revenue and news that CEO Larry Ellison will step down from his post.
S&P 500 (September 15th – 19th, 2014)
For its part, the industrial sector lagged amid weakness in machinery stocks after Caterpillar provided a disappointing update regarding its sales over the past three months. Caterpillar was the weakest performer in the Dow and the only stock that fell more than 1.0%. On the upside, 22 index components posted gains with Coca-Cola leading the group. The stock climbed 0.6%, contributing to the relative strength of the consumer staples sector (up 0.2%).
Similar to consumer staples, the remaining three countercyclical groups settled ahead of the broader market. The telecommunications sector and utilities both jumped near 1.0%, while health care (up 0.1%) ended among the leaders despite volatile action in the biotech space.
Economic data was limited to the Leading Indicators report for August, which showed an increase of 0.2% on top of an upwardly revised 1.1% (from 0.9%) reading for July. Market analysts estimated an increase of 0.4%. The difference between what was expected and what was reported can be traced directly to the building permits contribution, which subtracted 0.18% in August. Consensus estimates could not be updated in a timely manner to reflect the impact of the weaker than expected building permits report, which was released yesterday.
On Friday, Apple started selling the iPhone 6 in stores with customers waiting in lines overnight to grab the new piece of technology. Apple stock has reversed earlier losses, currently up 9 cents at $101.88, as reportedly thousands of people queued up to greet the iPhone 6 as it went on sale.
Analysts on Friday were pre-occupied with what they see as a strong turnout, but they can’t agree on what it means for the opening weekend numbers for Apple. As well, given the growing use and ease of ordering on Apple’s online store, we believe there remains a clear trend toward ordering new iPhones online versus standing in line. So, analysts believe lines should actually shrink each year, rather than expand. That said, we believe this iPhone launch is being met with unprecedented demand.
Analysts also cautioned traders that first weekend sales for iPhones is a meaningless figure since it really only represents Apple’s supply. Demand is clearly there for the phones – in the tens of millions right now and significant demand will likely spill out of September into future months.
There is limited supply but analysts believe Apple could deliver solid first weekend sales on Monday, with them stating that 3-day weekend sales of the models could be announced. Any growth this weekend is positive considering it is so hard to get the 6 Plus and that the comparison from last year included China.
Apple (September 15th – 19th, 2014)
The iPhone 6 and iPhone 6 Plus is off to a better than expected start to sales. Analysts are stating how even Apple’s flagship New York 5th Avenue store was up 33% year-over-year and lines in the Midwest were tracking up 39% year-over-year. While there is little correlation, analysts are noting that overall sales are currently looking for 16% year-over-year iPhone unit growth in December 14th.
Many consumers seem to be attracted to a range of iPhone 6 features but one of the most attractive is the larger storage space. Of those consumers surveyed, 67% intended to buy the 6 Plus versus 33% the 6. Among other data, 47% of those consumers surveyed were interested in getting the Apple Watch (branded as the “iWatch”), which could be another successful product for Apple in 2014.
For the week, Apple’s stock reached a weekly high of $102.65 on Monday before it reached a weekly low of $99.46 on Tuesday.
after a wobbly week, the S&P 500 market index ended the week on a mixed note. Those that traded binary options based on the value of the S&P 500 through a binary call option midday on Friday would have been “in the money” by the end of the same trading day.
after a lot of focus on the Scottish independence vote, the euro experienced a range of movement in the week, ending the week on a low. Those that traded binary options based on the value of this currency pair on Friday morning through a binary put option would have experienced successful results by the afternoon of the same trading day.
in anticipation of the iPhone 6 and iPhone 6 Plus going on sale, Apple’s stock stayed high throughout the course of the trading week, ending up on Friday. Those that traded binary options based on the value of this stock midday on Friday through a binary call option would have been “in the money” by late afternoon of the same trading day.
This coming week there are two major economic announcements that are due to be released in the U.S. market. On Wednesday, September 24th, new home sales will be announced and U.S. jobless claims will be released on Thursday September 25th. If new home sales demonstrate positive results, this could lead to a rise in U.S. stocks related to the construction industry as well as indices such as the Dow Jones Industrial Average.
This week presented some positivity for the U.S. and European markets, creating a divergence from former weeks in the markets. Unlike recent weeks, the political situation in the Middle East and Ukraine seemed to take a back seat while many focused on other news. Overall, it was a positive week in the markets that ended on a mixed note in the U.S. and Europe.
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