US stocks are volatile as traders weigh Apple’s launch and the political outlook

U.S. stocks were muted on Monday, paring early gains, as investors weighed tech giant Apple’s much-anticipated product launch and continued to look for clues about the future path of interest rate hikes.

Wall Street’s S&P 500 was down 0.1 percent in afternoon trade, a slight advance that lifted the benchmark index more than a fifth above its most recent low in October 2022 — briefly pushing it into technical bull territory.

Apple shares retreated as the group unveiled a new “mixed reality” headset, after gaining 2.2 percent ahead of the product launch.

The Nasdaq Composite also edged lower as the weeks-long tech rally took a breather.

The stock market moves came after fresh data from the Institute for Supply Management showed on Monday that activity in the massive U.S. services sector slowed in May as new orders moderated due to high borrowing costs.

Wall Street’s mood was further dampened by a gloomy earnings forecast from analysts at Morgan Stanley, who forecast a 16 percent drop in S&P 500 earnings per share to $185 in 2023 from a year ago.

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The bank’s equity strategists expect corporate America to see slowing revenue growth and margin contraction due to tighter credit conditions in the U.S.’s recent regional banking turmoil.

Stock price ($) line chart of Apple stock reaching an all-time high before the new product launch

In government debt markets, the yield on the 10-year U.S. Treasury note was unchanged at 3.7 percent, while the shorter-dated two-year yield fell 0.01 percentage point to 4.49 percent — reflecting the ongoing “inversion” of yields. arc.

In the rest of the stock markets, the European regional Stoxx 600 closed down 0.5 percent, while the French CAC 40 lost 1 percent and the German Dax lost 0.5 percent.

The smaller losses came after European Central Bank President Christine Lagarde said in a speech that price pressures remained strong in the euro zone, indicating that policymakers were likely to continue raising interest rates. The ECB will next announce an interest rate decision on June 15.

The Federal Reserve will release its own interest rate announcement on June 14. The American central bank raised the interest rate from the near-zero level at the beginning of 2022 to a “target range” of 5-5.25 percent in an attempt to curb inflation.

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Brent, the international benchmark, jumped 3.6 percent after Saudi Arabia cut oil output by 1 million barrels a day, but was 0.6 percent higher at $76.58 a barrel, paring gains at $76.58.

West Texas Intermediate, the U.S. benchmark, was up 4.6 percent, then up 0.5 percent at $72.12. London’s energy-intensive FTSE 100 lost 0.1 percent, unable to maintain its previous rise.

Asian markets were broadly higher, with Japan’s benchmark Topix stock index up 1.7 percent and Hong Kong’s Hang Seng up 0.8 percent. Chinese shares bucked the upward trend, with the CSI 300 index of shares listed on the Shanghai and Shenzhen stock exchanges falling 0.5 percent.

The official Chinese media also called on investors to trust the country’s domestic stock market, according to the state economic daily, “clear understanding, persistent trust, determination and patience” are “the main tasks of all market players”. .

The Turkish lira extended its losses to a new record low of $21.3 against the dollar on Monday, despite the recent appointment of investor favorite Mehmet Şimşek as finance and finance minister.

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The move initially raised hopes that Turkey’s President Recep Tayyip Erdoğan was preparing to reverse course on his unorthodox economic policy, which many blame for triggering an acute cost-of-living crisis that has driven the lira lower.