Apple Speculation Drags U.S. Indexes

Nichole Harper
14 Jan, 2013
New York City

Stocks in New York traded lower ahead of comments from Fed officials. Tech stocks led the decliners on the speculation of weaker-than-expected demand for popular phones from Apple. UPS withdrew its offer for TNT Express.

[R]11:10 AM New York – Stocks in New York traded lower in ahead of comments from Fed officials. Tech stocks led the decliners on the speculation of weaker-than-expected demand for popular phones from Apple. UPS withdrew its offer for TNT Express.[/R]

Stocks in early trading declined ahead of comments from Fed officials later in the day.

Tech stocks were under pressure after Apple Inc fell 3% on the recycled worries that it cut orders for some components for its popular phone device.

However, the order cuts highlighted in an article published by the Wall Street Journal are old news and most analysts defended the stock.

UBS analysts said Apple is expected to announce sold earnings, reflecting strong demand during the holiday period.

Apple fell briefly below $500 a share for the first time in a year and the company shifts its growth momentum to tablet sales and expansion in China and Asia for its popular iPhone.

Fed watchers will be looking for comments from Fed officials later in the day. San Francisco Fed President John Williams is scheduled to speak at 11:55 a.m. ET and Atlanta Fed President Dennis Lockhart will speak at 12:40 p.m. ET.

Fed President Ben Bernanke is scheduled to speak at the University of Michigan just near the market close.

In Asian markets, Shanghai index soared 3% after a regulator said China may open up financial markets to foreign investors and the index soared to a 7-month high.

Markets in Japan were closed for a holiday however, the benchmark index in India soared 1.2%.

Stocks in Review

Apple Inc ((AAPL)) declined as much as 3% on the media speculation that demand for its popular phone devices is weaker than expected and the company may have cut component orders.

Apple component makers were under pressure. Qualcomm Inc ((QCOMM)) dropped 2%, Cirrus Logic Inc ((CRUS)) plunged 6% and Avago Technologies Ltd ((AVGO)) declined 0.6%.

Harry Winston Diamond Corporation ((HWD)) climbed 9.5% or $1.35 to $15.81 after the Canada based luxury watch retailer agreed to sell its luxury brand diamond jewelry and watch division to The Swatch Group Ltd. for $750 million in cash plus assumption $250 million and net debt.

HHGregg, Inc ((HGG)) declined 9% after it reported weak quarterly results and said same store sales in the period plunged 10% after the company did not offer loss-leader strategy to preserve margins over the holiday period but sales suffered.

PPG Industries, Inc. ((PPG)) slipped 1.1% or $1.57 to $140.57 after the decorative coatings supplier reported fourth quarter sales grew 4% to $3.65 billion and net income climbed 5% to $227 million or $1.46 per diluted share.

Earnings were ahead of expectations but traders were still looking for higher earnings bounce.

SunPower Corp ((SPWR)) plunged 6% after the solar power plant maker said it plans to take as much as $40 million in restructuring charges and most of the charges will be accounted in the fourth quarter.

Tiffany & Co. ((TIF)) gained 59 cents to $60.87 after the jewelry retailer estimated earnings for the year ending January to be at the lower end of its previous forecast range between $3.20 and $3.40 per share.

The jewelry retailer said net sales for the two-month period ending December grew 4% to $992 million.

United Parcel Service, Inc. ((UPS)) increased 1.7% or $1.39 to $79.31 after the courier services provider abandoned its €5.2 billion or $6.9 billion takeover of Netherlands based express delivery company, TNT Express.

Competition authorities at the European Commission informed the two companies that its proposed asset sales did not go far enough and may harm competition and will block the merger proposal.

UPS will pay a termination fee of 200 million euros to TNT and will withdraw the offer. In March 2012, UPS has offered to purchase TNT.

Shares of TNT Express declined 49% to 4.90 euros in early trading Amsterdam exchange.

V.F. Corporation ((VFC)) gained 1% or $1.55 to $150.55 after the apparel maker and Altamont Capital Partners offered to acquire Australian surfwear maker Billabong International Ltd. for A$1.10 a share in cash or $555.5 million.

Wausau Paper Corp ((WPP)) increased 1.9% after the company said it has retained financial advisor to sell its three paper mills in Wisconsin and Minnesota and plans to invest $200 million at its tissue and towel mills in Ohio and Kentucky.

As of a year ago, three mills that are likely to be sold employed 1,000 people.