- Apple jumps to new all-time high after OpenAI deal
- Interest rate decision and inflation data due Wednesday
4.15pm: Investors tread cautiously as markets hit records
Market activity at Tuesday's close reflected a mix of optimism and caution.
The S&P 500 rose by 0.3% and the Nasdaq climbed around 0.9%, propelled by Apple's surge to an all-time high. However, the Dow Jones Industrial Average dipped approximately 0.3%.
Despite ongoing uncertainty about economic conditions, stocks have continued to advance, fueled by ambiguous economic indicators that have cast doubt on the likelihood of multiple interest rate cuts by the Federal Reserve this year.
The Fed's two-day policy meeting, anticipated to conclude with interest rates unchanged at their current high levels, is being closely monitored for clues on potential future rate cuts, with September or November being potential timeframes.
Additionally, investors await May's consumer price data release, crucial for informing the Fed's decision-making process.
In the corporate sphere, Apple stood out, with its shares surging over 7% to achieve a new record high, driven by excitement surrounding the company's significant AI-related developments.
12.15pm: Apple leads Nasdaq recovery
The main Wall Street stock indices have cut their earlier losses and the Nasdaq Composite has climbed into the green, led by Apple Inc (NASDAQ:AAPL, ETR:APC), which is now up 6% to a new all-time high above $204.
This means the Cupertino colossus has added around $185 billion of extra value today, after announcing its OpenAI tie-up last night.
Apple perma-bull analyst Dan Ives at Wedbush said the announcement of the 'Apple Intelligence' launch “changes the game” for the company.
“We believe Apple's AI strategy will leverage its golden installed base around personalization and LLMs [large language model generative AI] on the phone that should change the growth trajectory of Cupertino [and] spur an AI-driven iPhone upgrade cycle starting with iPhone 16,” Ives said.
9.52am: Wall Street slips at the open
US stocks have started the day lower, with both the S&P 500 and Nasdaq falling back from record highs at the close on Monday.
However, it was the Dow Jones which suffered the largest hit, dropping by 0.76% or 294 points to 38,573.
Meanwhile, the S&P 500 dropped 0.4% or 21 points to 5,339, while the Nasdaq slipped 0.06% or 11 points to 17,176.
Some stocks making moves on Tuesday included General Motors, which lifted 1,7% after it announced a US$6 billion share buyback, following the early completion of a US$10 billion stock repurchase programme launched last November.
Eli Lily shares had started the day up more than 2% following FDA advisors recommending the approval of its Alzheimer's drug donanemab, however, the stock quickly slipped and is currently down 1%.
Shopify also jumped at the open before slipping back slightly, with the group receiving a boost after JP Morgan initiated its brokerage coverage with an overweight rating for the stock.
7.40am: Wall Street to open lower
Wall Street is on track to open lower this afternoon showing that the current concerns in Europe are being felt across the globe.
Dow Jones futures were down 150 points at 38,771, while the S&P 500 and Nasdaq are predicted to drop by 15 and 60 points respectively.
Economists are also preparing for the Federal Reserve's decision on interest rates on Wednesday and while expectations are that they will remain the same, guidance for summer cuts could prove vital in stimulating the market.
“We’ve got two big events coming in the middle of this week: the CPI print on Wednesday morning and the Fed meeting on Wednesday afternoon," said Zachary Hill at Horizon Investments.
“We’re kind of just biding time a little bit ahead of those.”
While traders await Wednesday's decision, tech investors have continued reacting to Apple's AI announcements from yesterday, in particular its partnership with OpenAI.
Shares in Apple fell 1.9% on the day and in premarket trading on Tuesday were down another 0.5% to $192.18.
Twitter owner and Tesla and SpaceX boss Elon Musk threatened to ban Apple devices from his companies if ChatGPT is integrated at the operating system level, as it is “an unacceptable security violation”.
“Unimpressive,” was the short review of the investor reaction from Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“None of it surprised or impressed investors,” she said, with the “cherry on top” for financial markets being Musk’s reaction. “The announcement from Apple didn’t go down smoothly the market’s throat yesterday,” said Ozkardeskaya.
Others were much more impressed. Not surprisingly, this included perma-bull analyst Dan Ives at Wedbush.
“Apple Intelligence changes the game for Apple... [it] is taking the right path to implement AI across its ecosystem while laying out the foundation for the company’s multi-year AI strategy," he said.