Stocks rose following a muted reading on U.S. job openings and despite mixed sentiment over revenue roadmaps for Dow components Apple and McDonald’s.
The Dow rose 61 points, with 20 of its 30 components advancing; the S&P 500 Index edged up 8 points; and the Nasdaq added 22. Advancers topped decliners by about five to three on the NYSE and on the Nasdaq. Treasury prices weakened. Gold futures fell $3.00 to close at $1,332.70 an ounce. Crude-oil futures rose 16 cents to settle at $48.23 a barrel.
In other business news:
- The Labor Department’s Job Openings and Labor Turnover Survey for July was little changed from the prior month. Job openings remained at an elevated 6.2 million, while hires remained at 5.5 million and separation at 5.2 million. There were minor moves in various job categories, with gains in job openings in transportation, utilities, warehousing, and education and services jobs, and declines in health care and government jobs (excluding education).
- DowDuPont, Inc., formed by the merger of Dow Chemical and DuPont, will alter its original plan to split into three companies that focus on agriculture, specialty chemicals, and materials. The chemical giant said it will now shift businesses worth more than $8 billion in yearly revenue from its materials science unit to its specialty chemical unit. DowDuPont will also split Dow Corning and distribute its silicone business among the materials and specialty companies. The moves follow pressure from shareholders who had commissioned a McKinsey study with an aim to influence DowDuPont’s post-merger plans. The firm’s shares (DWDP) rose 2.50%.
- McDonald’s shares (MCD) fell 3.22%, following a Bloomberg report that, according to analytics firm M Science, the fast food giant’s U.S. revenue and same-store sales were on track to miss analysts’ expectations. The report came as analysts also questioned how businesses like fast food chains might be affected by Hurricanes Harvey and Irma.
- Apple Inc. announced new products today from its new Apple Park campus in Cupertino, California. The Apple Watch Series 3 will have a built-in cellular connection that allows calls, web access, and music streaming without a phone. The technology giant also introduced the 4K Apple TV set-top box that may stream news and sports content. Lastly, Apple announced the new iPhone X, iPhone 8, and iPhone 8s smartphone models. The firm’s shares (APPL) rose upon initial buzz from the event, but ended 0.42% lower, after news emerged that iPhone X sales won’t make the September deadline to include its revenue in this fiscal year’s results. More on the iPhone in today’s column, below the line.
Apple unveiled its latest iPhone today, and as expected, it comes with advanced voice technology. This groundbreaking functionality allows a user to speak into the i-device and have those soundwaves sent to a satellite, which then beams the soundwaves into another user’s device while, and this is the crucial part, exactly replicating the sounds that the original user made, such that the recipient can understand them, even though the sounds had been sent into space and back again.
It would be wonderful if CEO Tim Cook had said Apple’s famous phrase “And one more thing” at the unveiling today and then proceeded to describe how a basic cellphone works, but sadly, he didn’t do that. He was too busy describing features that would justify the price. One version, the iPhone X, will cost $999, a huge leap from the days when carrier-subsidized iPhones set back a buyer about $200 (with higher monthly carrier plans to make up the difference of the iPhones, which retailed for about $600).
The Census Bureau estimates that real median household income in 2016 was $59,039. In that case, a married couple buying two iPhones would need to spend 3.3% of their annual pre-tax income for the privilege of checking Facebook on the go. Throw in a couple of kids who want the latest devices, and it’s even more. Although with the kids, depending on their ages, it might be possible to convince them that a five-year old iPhone is actually a new retro model that’s all the rage (“Trust me, having only one hour of battery life is the hot new feature all your friends are raving about.”). Disclaimer: It’s possible I don’t understand kids.
The challenge for Apple is that many people have settled into what they think smartphones are for, and it’s mainly for checking three or four apps that they use constantly. Any smartphone can do this, so until truly revolutionary new features come along, consumers might balk at paying more to get the features they already have. It’s possible, then, that the next round of smartphone upgrades mirrors that of 4K TVs in recent years. Consumers have been lukewarm on 4K TVs, partly because of the high prices, but partly because the human eye can only see so much resolution. Going from HDTV to 4K TV doesn’t create as big of a “Wow!” moment as going from a standard tube TV to a HDTV. It’s an incremental change, not a sea change.
Then again, this is Apple, so the company could probably slap a $5,000 sticker on a Bluetooth-enabled block of wood and still generate record revenue (“The iBlock is so perfectly weighted you’ll wonder why you haven’t been carrying it around your whole life,” Tim Cook would say. “And one more thing: no slivers.”)