Top 5 things that rocked U.S. markets this week:
1. Apple Makes History and Lifts Tech Gloom
Apple took market attention for a host of reasons this week, including reaching a historic Wall Street milestone by becoming the first U.S. company to hit $1 trillion in market capitalization.
Apple Inc.(NASDAQ:AAPL) stock hit the target number of $207.05 (based on the numbers of shares outstanding reported in its 10Q) just before noon on Thursday. Shares closed solidly above that Friday.
Shares moved into trillion-dollar territory following a strong earnings report earlier this week.
On Tuesday, Apple’s fiscal third-quarter results beat on the top and bottom lines, driven by sales of the pricier iPhone X and subscription revenue to services such as Apple Music and its App Store.
Apple also lifted the cloud that was hovering over the tech sector following weak reports from Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR).
The S&P Information Technology sector index finished at 1,277.05 Friday, compared with 1,262.27 a week ago.
2. Jobs Report Underscores Fed’s Plan
The July employment report gave the market more evidence that the economy is humming along at a pace that won’t alarm the Federal Reserve (to the relief of many investors hoping to get an early start on the weekend).
Although the rise in nonfarm payrolls was less than expected for July, jobs gains for the two previous months were revised up by 59,000, making the overall rise about in line with forecasts.
And average hourly earnings showed wage inflation at the same year-on-year pace as before.
That leaves the Fed set up to continue its plan of gradually rising rates.
“The economy is growing really strongly and headline inflation set to hit 3% next week, so the case for September and December Fed rate hikes remains strong,” ING Chief International Economist James Knightley said.
Fed fund futures are still pricing in the next rate hike to be at the next September 25-26 meeting. Odds for an additional increase in December remained little changed after the release at around 65%, according to ’s Fed Rate Monitor Tool.
3. Fed Reaffirms Its Stance With Inflation Near 2%
The Fed had its say this week as well. The Federal Open Market Committee kept rates unchanged as expected, and also kept the language in its statement substantially the same.
The FOMC said it continues to expect that further gradual increases in the target range for the federal funds rate will be consistent with "sustained expansion of economic activity, strong labor market conditions and inflation near the Committee's symmetric 2% objective over the medium term." That reaffirmed investor expectations that the central bank remained on track to hike rates twice more this year.
"The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation," the Fed said in its statement.
A report on Tuesday showed that the Fed's preferred measure of inflation, the core personal consumption expenditures price index, which excludes food and energy prices, was up 0.1% and 1.9% on a year-over-year basis. The Fed targets inflation of 2%.
4. Oil Ends Week Lower
Oil settled lower for the day and week Friday, as concerns about a trade war stifling demand hurt sentiment.
On the New York Mercantile Exchange crude futures for September delivery fell 47 cents to settle at $68.49 a barrel.
Oilfield services firm Baker Hughes reported on Friday that the number of U.S. oil drilling rigs in operation fell by 2 to 861, pointing to tightening U.S. output.
And the weekly oil inventories numbers showed an unexpected rise in U.S. stockpiles, further weighing on prices.
Concerns also remained about escalating output from the OPEC and Russia. On June 22-23, OPEC, Russia and other non-members agreed to return to 100% compliance with oil output cuts that began in January 2017, after months of underproduction elsewhere had pushed adherence above 160%.
Even though output continued to decline in Iran, Libya and Venezuela, the survey suggested that compliance had only fallen to 111% in July, suggesting more room for increasing production from the likes of Saudi Arabia or OPEC’s non-member ally Russia.
5. Market Can’t Shake Trade-Related Jitters
Trade worries whipsawed this week, keeping the market on edge, amid conflicting reports of U.S. action and proposed retaliation from China.
Tensions on Wall Street eased significantly on Tuesday on a report from Bloomberg that both sides were trying to restart trade talks. But that was quickly countered by another report that the U.S. was considering raising tariffs on $200 billion in Chinese goods to 25% from 10%, which the White House later confirmed was under consideration.
On Friday, China shot back with a potential plan for tariffs on $60 billion of U.S. goods.
"The U.S. side has repeatedly escalated the situation against the interests of both enterprises and consumers," China said, according to Reuters. "China has to take necessary countermeasures to defend its dignity and the interests of its people, free trade and the multilateral system."
White House Economic adviser Larry Kudlow warned China not to underestimate President Donald Trump.