World stock markets fell yesterday as declines in iPhone sales brought about some concern about consumer strength, while the dollar edged higher before a US central bank statement that may hint towards a rate hike next month.
Apple Inc lost 0.9 per cent as the biggest drag on the S&P 500 after it reported a surprise fall in iPhone sales on Tuesday. The drop came on the heels of a decline in sales for US automakers for April and a soft first-quarter reading on US growth last week.
Even with the decline, Apple still managed to top earnings estimates in what has been a strong quarter for US companies. Thomson Reuters data shows first-quarter growth is currently expected to be 14.2 per cent, the best quarter since 2011, with 357 of S&P 500 companies having reported.
“Think about the mixed message you had in the first quarter – GDP light, monthly auto sales light, iPhone sales light, so you’ve got extraneous negative data,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
A report by payrolls processor ADP said private employers expanded their payrolls by 177,000 jobs last month, the smallest gain since the 62,000 increase last October as they faced increasing difficulty finding qualified workers.
Other data indicated the pace of growth in the US economy’s service sector increased in April, led by a jump in new orders, according to an industry report.
The Dow Jones Industrial Average fell 34.45 points, or 0.16 per cent, to 20,915.44, the S&P 500 lost 7.26 points, or 0.30 per cent, to 2,383.91 and the Nasdaq Composite dropped 30.67 points, or 0.5 per cent, to 6,064.70.
Europe’s STOXX 600 index lost 0.11 per cent to retreat from a 20-month high and MSCI’s gauge of stocks across the globe shed 0.26 per cent.
The US economic data helped push the dollar higher ahead of the Federal Reserve statement.
While the central bank is expected to leave rates unchanged later today, investors will look for signs the it may hike in June. Traders are currently pricing in a 70.7-per cent chance of a hike of at least a quarter-point next month, according to CME’s FedWatch tool.
The dollar index rose 0.11 per cent, with the euro down 0.13 per cent to $1.0913.
Benchmark 10-year notes last rose 1/32 in price to yield 2.2946 per cent, from 2.296 per cent late on Tuesday.
The US Treasury said it is studying the possibility of issuing ultra long-term bonds.
Oil prices rebounded from near 2017 lows after preliminary data showed a much larger-than-expected fall in US crude stocks, reviving bullish sentiment about easing oversupply.
US crude fell 0.13 per cent to $47.60 per barrel and Brent was last at $50.48, up 0.04 per cent on the day.