While you were sleeping: Goldman lifts Apple shares

Thursday 19th November 2015

Wall Street gained, propelled by Apple shares, as investors awaited the latest Federal Reserve meeting minutes as policy makers underpin expectations of a US interest rate increase next month.

"I am now reasonably satisfied the situation has settled down... So I am comfortable with moving off zero soon, conditioned on no marked deterioration in economic conditions," Atlanta Fed President Lockhart told a conference of bankers, traders and regulators, Reuters reported.

"I believe it will soon be appropriate to begin a new policy phase,” noted Lockhart, who has a vote at the December meeting.

In New York trading at about 11:34am, the Dow Jones industrial average gained 0.7 percent. At about 11.19am trading, the Standard & Poor’s 500 Index rose 0.6 percent while the Nasdaq Composite Index increased 0.7 percent.

Advances in shares of Apple and those Wal-Mart Stores, last trading 3.1 percent and 1.7 percent higher respectively, led the gains in the Dow.

Shares of Apple rose after Goldman Sachs added the company to its "conviction buy" list, predicting the stock will climb to US$163 in the next 12 months.

"We expect that over the next year, the focus will shift from unit growth (which is slowing given a maturing smartphone market) to installed base monetisation and recurring revenues (“Apple-as-a-Service”), Goldman analyst Simona Jankowski and her team wrote in a note, Bloomberg reported. “Apple’s model has already tilted that way with its new iPhone 6s instalment plans, and we see the upcoming TV service as a powerful next step."

The focus is on the minutes from the Fed’s October meeting, slated for release at 2pm Wednesday Washington time.

"All eyes are on the Fed, while geopolitical concerns remains on the minds of the investors," Peter Cardillo, chief market economist at First Standard Financial in New York, told Reuters. "These external factors are going to keep the market on the edge, in spite of what the Fed may or may not indicate."

The latest data on the US housing market were mixed but failed to alter the view that the sector is improving.

A Commerce Department report showed that US housing starts fell 11 percent to a 1.06 million annualised rate in October, the slowest since March, down from a revised 1.19 million rate in September.

Even so, building permits gained 4.1 percent to a 1.15 million annualised rate.

"Overall, fundamentals for the sector remain solid," Michelle Girard, chief economist at RBS in Stamford, Connecticut, told Reuters. “Household formation is rising, demand for new homes is outstripping supply, and home builder confidence remains near its highest level in a decade.”

In Europe, the Stoxx 600 Index ended the day with a 0.1 percent decline from the previous close. Germany’s DAX Index also slipped 0.1 percent, while France’s CAC 40 Index fell 0.6 percent. The UK’s FTSE 100 Index added 0.2 percent.

BusinessDesk.co.nz

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