Apple's strong earnings lift Wall Street, ease trade worries

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NEW YORK (Aug 1): U.S. stocks rose on Wednesday as Apple's robust earnings report boosted shares of technology companies and eased worries over an escalating trade war between the United States and China.

Apple jumped 4.7% to a record high of US$199.26, after forecasting blowout current-quarter sales and was the biggest boost to all the three major indexes.

The technology sector rose 0.91% . Only three of the 11 major S&P sectors were higher.

The results come as disappointing reports from companies such as Facebook and Netflix — part of the so-called FAANG group stocks — have fanned worries over the growth of high-flying technology companies.

FAANG members Facebook, Netflix, Amazon.com and Google-parent Alphabet were trading up between 0.20% and 1.3%.

"Apple stock move and its results will be positive, but whether that is a long-lasting effect on the tech sector is a question that cannot be answered," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.

"There is a big additional tariff that is being weighed and could be put into place at any moment, which is a concern."

The Trump administration plans to propose tariffs of 25%, instead of the initially proposed 10%, on US$200 billion worth of imported Chinese goods. Beijing vowed to retaliate if the United States slapped further tariffs.

The industrials index dipped 0.65%, weighed by a fall in trade-sensitive stocks. Caterpillar declined 2.1%, while 3M dropped 1.2% and dragged on the Dow Jones Industrial Average.

Also weighing on sentiment was a 1.41% fall in the energy group, which was pressured by a more than 1.6% drop in crude oil prices.

At 9:50 a.m. ET, the Dow Jones Industrial Average was up 2.00 points or 0.01%  at 25,417.19; the S&P 500 was up 2.74 points or 0.10% at 2,819.03; and the Nasdaq Composite was up 36.90 points or 0.48% at 7,708.69.

Financials rose 0.86% after yields on the benchmark 10-year Treasury notes hit 3% for the first time since June 13, according to Reuters data.

Among stocks, Akamai Technologies dropped 6.7% after its forecast for third-quarter revenue largely missed expectations.

Tesla rose 1% ahead of its results scheduled after the bell.

Also in focus is the Federal Reserve, which is expected to keep interest rates unchanged in an announcement at 2 p.m. ET (1800 GMT) at the end of its meeting. The market expects another two rate hikes this year.

Declining issues outnumbered advancers for a 1.77-to-1 ratio on the NYSE and advancing issues outnumbered decliners for a 1.12-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and one new low, while the Nasdaq recorded 34 new highs and 33 new lows.