The Dow Jones Industrial Average experienced a marginal decline on Tuesday, marked by a significant drop in Apple Inc. (NASDAQ:AAPL) shares, despite the tech giant’s highly-anticipated unveiling of its latest iPhone. Nevertheless, a surge in energy stocks mitigated overall losses as investors braced for fresh inflation data set to be released the following day.
Closing 0.1% lower, the Dow Jones Industrial Average shed 17 points, while the Nasdaq Composite slumped by 1%, and the S&P 500 saw a 0.6% decrease.
Apple’s iPhone Launch: A ‘Sell on the News’ Event
Apple (NASDAQ:AAPL) found itself at the forefront of the tech stumble, closing approximately 2% lower. The company launched its iPhone 15 alongside the new Apple Series 9 watch, and while the offerings largely met Wall Street expectations, some were surprised that the tech giant chose to maintain the price of its iPhone Pro model at $999, unchanged from the previous year.
Despite this, optimistic tech enthusiasts on Wall Street continue to anticipate that the latest iPhone will motivate customers who still cling to older iPhone models to upgrade to the more advanced and pricier iPhone Pro and Pro Max models.
Wedbush, in a Tuesday note, expressed confidence in a substantial iPhone Pro mix shift for the iPhone 15, projecting a 75%/25% base model ratio versus the historical 60%/40% seen over recent years. This shift is expected to provide a significant average selling price (ASP) boost, particularly in the Chinese market, favoring the Pro/Max model.
Oracle Faces Decline as Guidance Fails to Impress
Oracle (NYSE:ORCL) reported fiscal first-quarter earnings that exceeded Wall Street estimates. However, the cloud services provider’s revenue guidance for the current quarter fell short of expectations, leading to a more than 13% decline in its share price.
Oracle expects adjusted earnings per share in the range of $1.30 to $1.34 and revenue of $13 billion for the fiscal second quarter. This falls short of analyst estimates, which projected earnings per share of $1.33 on revenue of $13.28 billion, respectively.
Despite the disappointment in growth rates, UBS remains optimistic about Oracle’s AI-led growth story, asserting that the slower growth does not alter the thesis for most long-term investors.
Energy Stocks Shine Amidst Rising Oil Prices
Energy stocks experienced a robust performance, surging more than 2% during the day, which helped offset broader market losses. This rally was buoyed by a recent increase in oil prices, reaching new highs for the year, following announcements by Saudi Arabia and Russia to extend oil supply cuts through the end of the year.
Among the top gainers were Marathon Oil Corporation (NYSE:MRO), EQT Corporation (NYSE:EQT), and Occidental Petroleum Corporation (NYSE:OXY), all closing 4% higher.
Incoming Inflation Report Draws Investor Attention
Investor focus was also drawn to the impending release of the consumer inflation report scheduled for Wednesday. This report is expected to confirm recent indications of a slowdown in inflation.
Economists anticipate that the headline Consumer Price Index (CPI) accelerated in August, rising by 0.6% compared to the previous month’s 0.2% pace. However, core inflation, a metric closely monitored by the Federal Reserve and which excludes food and energy prices, is expected to have remained steady at 2% in August but slowed to a 4.3% increase over the 12 months through July.
The deceleration in price increases for goods, stemming from a shift in demand from goods to services post-pandemic, appears to be the primary driver behind the recent slowdown in inflation.
Morgan Stanley, in a note, attributed the disinflation in August primarily to core goods, where they anticipate another negative print.
This consumer inflation data release precedes the producer price inflation data also scheduled for Wednesday, and it comes ahead of the Federal Reserve’s decision on September 20. During this decision, the U.S. central bank is widely expected to maintain its benchmark interest rate without any changes.
