Stocks higher as Apple jumps; Fed leaves rates unchanged

Greg Mulligan
The Associated Press

NEW YORK (AP) — U.S. stocks are slightly higher Wednesday as investors expressed relief the Federal Reserve doesn’t appear overly eager to raise interest rates. The central bank left rates unchanged at its latest meeting, as expected. Apple is climbing after it announced a huge stock repurchase and solid results in its latest quarter and smaller companies are also rallying. Health care firms are down, as are household food and beverage companies.

KEEPING SCORE: The S&P 500 held steady at 2,655 as of 2:30 p.m. Eastern time. The Dow Jones industrial average rose 23 points, or 0.1 percent, to 24,122. It had fallen as much as 112 points in morning trading. The Nasdaq composite rose 25 points, or 0.4 percent, to 7,156.

The Russell 2000 index of smaller-company stocks climbed 12 points, or 0.8 percent, to 1,563 as smaller technology and health care companies and retailers advanced. Most of the stocks on the New York Stock Exchange moved higher.

APPLE PAY(S OFF): Apple had a slightly better fiscal second quarter than Wall Street anticipated, and after months of concerns about weak iPhone sales, shareholders were pleased with Apple’s forecasts. The tech giant said it will use some of its tax savings to buy back $100 billion of its own stock and to raise its dividend. Apple stock climbed 5 percent to $177.55. That helped offset small losses for other technology companies including Microsoft, Intel and Cisco Systems.

FED DECISION: The Fed left its benchmark interest rate unchanged in May and said it expects to keep raising interest rates gradually. The central bank said inflation has approached its 2 percent target, but it didn’t suggest it is overly concerned that inflation will strengthen more than that.

The central bank says it expects to raise interest rates a total of three times this year. It raised them once in March and investors think the next boost will come in June. One of the key debates on Wall Street is whether the Fed will raise rates three times as planned, or if it will raise them four times in response to more signs of inflation and faster economic growth.

Bond prices turned slightly higher. The yield on the 10-year Treasury note fell to 2.96 percent from 2.97 percent. The dollar also weakened and fell to 109.66 yen from 109.81 yen. The euro rose to $1.2007 from $1.1993.

FEELING THIRSTY: Molson Coors Brewing suffered its worst drop in 13 years after it said the U.S. beer industry got off to a slow start in 2018. Molson said cold weather may have prompted consumers to cut back on their drinking. The company’s results fell short of analyst projections and it also said sales to wholesalers declined. Its stock shed 13.7 percent to $61.85. Coca-Cola and Pepsi continued to fall, with Coke down 1.1 percent to $42.14 and Pepsi sliding 1.8 percent to $97.32.

Estee Lauder slumped after the company said sales in the Americas grew at a far slower pace than sales in other regions. It fell 7.6 percent to $133.91.

HEALTH WOES: Drugmaker Gilead Sciences dropped 7.5 percent to $67.15 after its sales fell short of analyst estimates. Revenue from two of Gilead’s major hepatitis C drugs dropped as new competitors entered the market. Animal health company Zoetis also disappointed Wall Street and fell 4.7 percent to $79.47.

SNAPPED: Snap skidded 21.4 percent to $11.10 after its first-quarter revenue fell far short of estimates. The company said its redesign, which some users have slammed, was one of the reasons for the slip.

COPY THAT: Xerox’s CEO and most of its board will resign as investors Carl Icahn and Darwin Deason push the company to stop its sale to longtime partner Fujifilm. The duo called for Jacobson to resign in late January, shortly before Xerox announced a deal that will result in Fujifilm taking majority control of Xerox. Jacobson and five other directors are being replaced. Xerox said the new board will reconsider the deal with Fujifilm and could terminate or restructure Xerox’s relationship with the company.

Xerox shares fell 6.3 percent to $30.26.

EUROPE SLOWDOWN: After posting its highest growth in a decade during 2017, economic growth in the 19-country eurozone slowed a bit in the first quarter, largely because of temporary factors such as cold weather. Despite the slowdown, growth was higher than the equivalent in the U.S.

The DAX in Germany soared 1.5 percent and the French CAC 40 picked up 0.2 percent. In Britain the FTSE 100 rose 0.3 percent.

ENERGY: Benchmark U.S. crude jumped 1 percent to $67.93 a barrel in New York, while Brent crude, the international standard, rose 0.4 percent to $73.43 per barrel in London.

Wholesale gasoline lost 0.4 percent to $2.08 a gallon. Heating oil rose 1 percent to $2.12 a gallon. Natural gas fell 1.7 percent to $2.75 per 1,000 cubic feet.

METALS: Gold fell 0.1 percent to $1,305.70 an ounce. Silver jumped 1.5 percent to $16.38 an ounce. Copper added 1 percent to $3.07 a pound.

ASIA: Japan’s Nikkei 225 slipped 0.2 percent and the Hang Seng in Hong Kong lost 0.3 percent. South Korea’s Kospi gave up 0.4 percent.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay

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