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May 8, 2018

MoneyBeat: Apple Is Leading the Market Once Again | The Wall Street Journal - May 8, 2018

The Wall Street Journal
MoneyBeat

Apple Is Leading the Market Once Again

By Ben Eisen
Morning MoneyBeat is the Journal’s pre-market primer. To receive the newsletter via email, click here.
Market Snap at 05/08/2018 07:38:28 AM ET
S&P 500 Futures -0.38%
2659.75
DJIA Futures -0.35%
24215
U.S. 10 Year 1/32
2.95%
WSJ Dollar Index 0.28%
86.57
Crude Oil -1.22%
$69.87
Gold -0.3%
$1310.20
Europe
Asia
FTSE 100 -0.01%
Nikkei 225 0.18%
DAX -0.6%
Hang Seng 1.36%
CAC 40 -0.58%
Shanghai 0.79%

Overnight Developments

  • Global markets followed oil prices lower as investors awaited President Donald Trump’s decision on whether to withdraw from the Iran nuclear deal. S&P 500 futures pointed to an opening fall of 0.3%.
  • The Stoxx Europe 600 was recently down by 0.3%.
  • Earlier, Asian markets were broadly higher, with Hong Kong’s Hang Seng Index up 1.4% and Japan’s Nikkei Stock Average up 0.2%.
  • The Breakfast Briefing

    Apple Inc. is helping pull the stock market higher.
    The technology giant, which experienced volatility for much of the year as investors fretted about demand for its mobile phones, made a big run higher in recent days after the company's latest earnings report helped put those worries to rest.
    Also aiding the rally: the announcement of a $100 billion buyback program, and Warren Buffett's disclosure that Berkshire Hathaway increased its stake in the company.
    "Apple has an incredible consumer product," Mr. Buffett said at Berkshire's annual meeting last weekend.
    After climbing 13% last week to notch its best week since 2011, Apple gained another 0.7% Monday to close at $185.16, a fresh record high. Many believe Apple could keep climbing due to its robust earnings power, strong brand, and relatively low valuation compared with other tech behemoths.
    Apple is just one stock of more than 500 in the index. More than half of them were up Monday as the S&P 500 gained 0.3%. But if Apple keeps rising, it could be a key factor propelling the broader market during one of the more volatile stretches of the nine-year-old bull market.
    The company's $910 billion market capitalization gives it a 4.1% weighting in the S&P 500, by far the heaviest in the index. Apple's gains have helped the S&P 500 rise for three of the last five sessions.
    Technology stocks like Apple have been a key force lifting the market in recent years, and they continue to be some of the biggest gainers. The S&P 500 tech sector is up 7.9% this year, the best performance among the S&P's 11 sectors.
    At the same time, a flame-out in Apple's recent rally would be a setback to the S&P 500. In February, Apple led the S&P 500's rebound from a sharp selloff, only to turn lower again alongside the broader market.
    For now though, many are bullish. Among 42 analysts who follow Apple, nearly two-thirds have a buy rating on the stock, according to FactSet. They see the stock climbing, on average, 5.5% from its current level to $195.28.
    Are you bullish on Apple? Why or why not? Let the author know your thoughts at ben.eisen@wsj.com.

    Daily Factoid

    On this day in 1886, Dr. John S. Pemberton sold the first glass of Coca-Cola at the soda fountain of Jacob’s Pharmacy in Atlanta. Some believe the “tonic” beverage originally gained popularity because it contained trace amounts of real cocaine and extract from the African kola nut, a stimulant and thirst quencher.

    Key Events

    The Labor Department's Job Openings and Labor Turnover Survey, out at 10 a.m. ET, is expected to show a slight increase in job openings in March.

    Stocks to Watch

    Citigroup—Up 1.5%: Activist investor ValueAct Capital Partners LP has built a roughly $1.2 billion stake in Citigroup, a bet that the giant bank’s strength as a service provider to corporations will enable it to thrive in the post-crisis era and make up ground its shares have lost in recent years, The Wall Street Journal reported.
    Amazon.com—Down 0.5%: Amazon closed up 1.2% at $1,600.14 in a third straight session of gains Monday, giving the e-commerce giant its first all-time high in almost two months. The stock needs to gain an additional 3% and reach $1,648.71 to give Amazon a market value of $800 billion for the first time.
    Snap—Up 1.5%: The social-media firm said Chief Financial Officer Drew Vollero is stepping down, leaving the social-media company that has struggled since he helped take it public last year.
    Macy's—Up 0.2%: Shares of the department store fell 3.8% Monday, their worst day in more than three months, after Deutsche Bank said in a note to clients it sees "limited upside" for department stores.

    Number of the Day

    $70.29
    U.S. crude rose 0.8% to $70.29 a barrel on Monday, breaking the $70 mark for the first time since 2014 amid geopolitical risks and a healthier backdrop.

    Must Reads

    Disney releases earnings after U.S. markets close today. The report comes as Comcast puts the pieces in place to make a possible hostile bid for 21st Century Fox’s entertainment assets that could thwart Disney’s previously announced deal for most of Fox.
    Chinese smartphone maker Xiaomi is gearing up for a Hong Kong initial public offering and targeting a valuation of between $70 billion and $80 billion, which is lower than the $100 billion previously discussed.
    Japan’s Takeda Pharmaceutical reached an agreement to buy Shire in a $62 billion deal, capping a monthslong battle for control of the European drugmaker.
    The Commodity Futures Trading Commission is considering employee buyouts and the extension of a hiring freeze. It also is asking other government agencies for help with some work.
    President Donald Trump said he would announce his decision on the Iran nuclear accord today. Geopolitical tensions helped push U.S. oil prices above $70 a barrel yesterday for the first time since 2014, though oil futures in Asia fell today.