New York Stock Market Declines Early Ahead of iPhone Launch... Oil Price Pressure Rises

Major indices on the U.S. New York Stock Exchange showed early declines on the 12th (local time) amid rising oil prices fueling inflation concerns ahead of Apple, the company with the largest market capitalization, holding its new iPhone launch event.

As of 10:51 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, centered on blue-chip stocks, was down 68.64 points (0.2%) from the previous close, standing at 34,595. The large-cap S&P 500 index fell 18.98 points (0.42%) to 4,468, while the tech-heavy Nasdaq index dropped 88.16 points (0.63%) to 13,829.

Currently, eight of the 11 sectors in the S&P 500, excluding energy, financials, and utilities, are all declining. Apple, ahead of its iPhone launch this afternoon, is trading more than 1.6% lower than the previous close. Oracle plunged nearly 12% after its quarterly revenue missed expectations and it lowered its future outlook. Concerns over cloud revenue have also weighed on competitors Amazon, Alphabet, and Microsoft, which are all declining. Tesla, which surged more than 10% the previous day, is trading down over 1%.

Investors are closely watching the movements of major tech stocks while awaiting news of Apple’s iPhone 15 launch this afternoon. As the company with the largest market capitalization, Apple’s stock movement is considered a key factor that can influence the overall market sentiment. Last week, Apple’s stock plummeted following news of a ban on iPhones by Chinese authorities, which worsened investor sentiment across tech stocks. Oracle’s sharp decline today is adding pressure on the tech sector as a whole.

Oil price movements are also notable ahead of the Consumer Price Index (CPI) release scheduled for the 13th. The Organization of the Petroleum Exporting Countries (OPEC) recently maintained its oil demand forecasts for this year and next, reflecting the ongoing economic recovery, which has contributed to rising oil prices today. The WTI October contract price surpassed 2% intraday, exceeding $89 per barrel, marking the highest level since November last year. News of severe flooding in Libya, an OPEC member, leading to the closure of four oil export terminals in the eastern region, also added upward pressure on oil prices. This rise in oil prices raises concerns about future inflation, prompting caution regarding tightening monetary policy.

On the 13th, the U.S. August CPI, which could provide key hints about the Federal Reserve’s (Fed) monetary policy direction, will be released. With recent oil price increases, the August CPI inflation rate is expected to slightly exceed the previous month’s rise, hovering around 3.6%. The core CPI, which excludes volatile energy and food prices, is forecasted to slow to the low 4% range. On the 14th, the U.S. August Producer Price Index (PPI), a wholesale price indicator, will be published. Since wholesale price increases typically pass through to consumer prices, this will be closely watched. Retail sales data for August will also be released on the same day. Wall Street expects retail sales, which had rebounded earlier, to slow this time. On the 15th, the University of Michigan’s consumer sentiment survey will be released.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, federal funds futures markets are currently pricing in over a 93% chance that the Fed will keep interest rates unchanged in September. The probability of a rate hold in November stands at around 57%. However, if inflation indicators such as the CPI released this week exceed market expectations, the possibility of additional rate hikes could gain renewed momentum. The remaining Federal Open Market Committee (FOMC) meetings this year are scheduled for September, November, and December.

In the New York bond market, the benchmark 10-year Treasury yield rose slightly to around 4.29%, while the 2-year yield, which is sensitive to monetary policy, edged up to about 5.01%. The dollar index, which measures the U.S. dollar’s value against six major currencies, moved above 104.83, up more than 0.2% from the previous close.

The NFIB Small Business Optimism Index released today came in at 91.3, below Wall Street expectations. This index reflects small business optimism and has remained below the long-term average of 98 for 20 consecutive months. Steven Ines, Managing Partner at SPI Asset Management, said, "Considering persistent pressure on service prices, the rebound in oil prices, and the diminishing favorable base effects, the likelihood of inflation returning to the 2% target anytime soon appears low."

European stock markets are showing mixed trends. Germany’s DAX index is down 0.48%, France’s CAC index is down 0.36%, while the UK’s FTSE index is up 0.41%.