While you were sleeping: Apple slumps on iPhone X concern
By Margreet Dietz
Dec. 27 (BusinessDesk) - Wall Street moved lower as a decline in Apple shares weighed on sentiment, while oil gained on reports of a pipeline explosion in Libya.
In 11.13am trading in New York, the Dow Jones Industrial Average inched 0.03 percent weaker, while the Nasdaq Composite Index fell 0.5 percent. In 10.58am trading, the Standard & Poor’s 500 Index slipped 0.1 percent.
US Treasuries rose, pushing yields on the 10-year note 2 basis points lower to 2.46 percent.
The Dow slipped as slides in shares of Apple and those of Goldman Sachs, down 2.6 percent and 1.1 percent respectively, outweighed gains in shares of Wal-Mart and those of Nike, recently up 1 percent and 0.8 percent respectively.
Apple shares declined amid concern about disappointing demand for its iPhone X following a report in Taiwan’s Economic Daily that the company has lowered its sales forecast for the first quarter of next year to 30 million units, down from 50 million previously.
Analysts have also cut their outlook. JL Warren Capital analysts are among those who have lowered iPhone X shipment projections for the first quarter, predicting shipments will drop to 25 million units in the first quarter of 2018 from 30 million units in the fourth quarter amid reduced orders at some Apple suppliers, according to Bloomberg.
The drop reflects “weak demand because of the iPhone X’s high price point and a lack of interesting innovations,” New York-based research firm JL Warren Capital said in note to clients Friday, according to Bloomberg.
Some were more upbeat.
“Our work continues to suggest the March and June quarters will have a significant amount of iPhone X make-up shipments,” Chicago-based Loop Capital said in a note last week, forecasting shipments of 40-45 million units in the first quarter of 2018, up from an estimated 30-35 million units in the current quarter, Reuters reported.
In a holiday-shortened week, the latest US economic data will arrive in the form of reports on the S&P Corelogic Case-Shiller home price index, consumer confidence, and pending home sales index, due Wednesday; international trade in goods, weekly jobless claims, and farm prices, due Thursday; and Chicago PMI, due Friday.
In Europe, key financial markets were closed for the Boxing Day holiday.
The European Central Bank releases its Economic Bulletin on Thursday, while Germany's consumer price index is due on Friday.
Oil climbed amid reports of an crude pipeline explosion in Libya. Armed men blew up a Libyan pipeline pumping crude oil to Es Sider port on Tuesday, reducing the North African country’s output by about 90,000 barrels a day, Reuters reported, citing military and oil sources.
When it comes to commodity prices, some traders predict 2018 will see a revival.
The Standard & Poor’s GSCI Total Return Index, which tracks 24 raw materials, is hovering near a record low valuation relative to the benchmark S&P 500. That suggests a major and extended 10-year bull market run starting in 2018, said Shawn Hackett, the president of Hackett Financial Advisors in Boynton Beach, Florida, according to Bloomberg.
"In 2008 stocks were screaming to be bought on this valuation metric, and that was proven correct," Hackett said in a note to clients late Monday. "We now have the exact opposite condition where commodities are screaming to be bought at the expense of stocks."