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Wednesday, September 9, 2015
Markets plunge as attention turns to Apple event
Dow kept dropping all day to finish down 239 (down more than 300 from session highs at the opening), decliners over advancers 3-1 & NAZ fell 55. The MLP index was off 5+ to the 345s (about where it was at the end of 2011) & the REIT index lost 3+ to the 292s. Junk bond funds were weak & Treasuries finished higher. Oil sank to the 44s & gold drifted lower.
Apple, a Dow stock, introduced its new
iPhone, the most important product in its business, with a faster
processor & new touch capabilities. The new models, called
iPhone 6s & 6s Plus, which look like their predecessors that debuted
last year, add an improved camera, speedier processor & a new feature
called 3D Touch that lets users make different commands & reach
shortcuts & menus by pressing down harder or softer on the screen. The
handsets come in 4 colors: silver, gray, gold & rose gold. “While they may look familiar, we have changed everything about these new iPhones.” said CEO Tim Cook. “They are the most advanced smartphones in the world.” The
3D Touch features serves as a shortcut for commonly used applications.
Pressing down on the camera icon on the iPhone gives a quick entry point
for taking a selfie. Pressing on an e-mail will give a preview of a new
message. The iPhone generated $31.4B in sales last qtr, making up 63% of company revenue.
The company also unveiled a larger iPad targeted at business customers, updated its Apple Watch, which went on sale in Apr, & showed off a
revamped Apple TV set-top box. The Sep event is the company's most
anticipated annual gathering, & highlights the company’s gadgets &
services ahead of the holiday shopping season. The stock fell 2.16. If you would like to learn more about AAPL, click on this link:
Job openings in the US surged to a record in Jul as hiring cooled,
a sign employers are having a hard time finding qualified workers. The number of
positions waiting to be filled jumped by 430K, the biggest gain since
Apr 2010, to 5.75M, according to the Labor Dept. That’s the most in data going back to 2000.
The
Jul data show employers were optimistic enough about the economic
outlook to post more vacancies & compete for a dwindling pool of
available workers as the jobless rate held at a 7-year low, which
should eventually help push wages up. Federal Reserve officials also
will have to consider whether market turmoil that began last month will
offset labor-market improvement & interrupt plans to raise the
benchmark interest rate for the first time since 2006. The forecast projected 5.3M openings in Jul. The
Job Openings & Labor Turnover Survey, JOLTS, adds context to
monthly payrolls figures by measuring dynamics such as resignations,
help-wanted ads and the pace of hiring. Fed Chair Janet Yellen has said
she follows the report as a gauge of labor-market tightness & worker
confidence. The report showed record job openings at retailers, restaurants, health-care providers and professional-services companies. The number of people hired declined to
4.98M, pushing the hiring rate down to 3.5% from 3.7% in the previous report. The gauge calculates the number of hires
during the month divided by the number who worked or received pay
during that period. Total
dismissals, which exclude retirements & those who left their jobs
voluntarily, decreased to 1.61M from 1.78M in Jun. In
the 12 months ended in Jul, the economy created a net 2.7M
jobs, representing 60.6M hires & 57.8M separations. There
are about 1.4 unemployed Americans vying for each opening, compared
with about 1.8 when the last recession began in Dec 2007.
The collapse of oil prices will
have a slightly bigger impact on US crude production this year & the
next than previously estimated, according to the Energy Information Administration. The agency reduced its output forecast for this year by 1.5% to 9.22M barrels a day & cut the 2016 forecast to 8.82M from 8.96M last month. “U.S.
monthly crude oil production is expected to decline through the middle
of next year in response to low oil prices,” the EIA said. “Current low oil prices are
making some U.S. oil production less profitable.” America’s shale drillers have sidelined more than half their oil
rigs since Oct as they confront tumbling prices. For US drivers,
the low prices mean they’ll pay less for gasoline at the pump, with
average prices in the country falling to $2.03 a gallon by Dec,
according to the report. That would be a 17% decline from average gasoline prices of $2.43 a gallon on Sep 7. The
EIA trimmed its US production forecast for the first 5 months of
the year as it switches to a new survey. The
U.S. pumped about 9.44M barrels of crude a day during the period,
down from a previous estimate of an average 9.53M. "Despite
the expected decline in monthly crude oil production, U.S. total output
this year is forecast to be the highest since 1972," the agency said. Output will begin rising in late 2016 as oil prices are forecast to move higher. West
Texas Intermediate should average $49.23 a barrel this year. That estimate was cut from $49.62 in Aug. The EIA reduced its 2015 estimate for Brent crude, the benchmark for more than half the world’s oil, to $54.07 from $54.40. For the year, gasoline at US pumps will average $2.41 a gallon, unchanged from last month’s report.
That was a short rally, measured in hours. Magic coming from China may take time & have a limited effect on current markets. The FOMC meeting is just a week away, & as usual, everybody is trying to outguess whether or not interest rates will be raised. High volatility, especially during the trading session, is an ominous sign for the markets. Dow is already down almost 300 in Sep.
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