WFM Whole Foods Market, Inc.

By Ellie Ismailidou and Sara Sjolin, MarketWatch

Fed report says presidential election making businesses cautious; Apple trading flat

U.S. stocks on Wednesday pared losses after a report from the 12 Federal Reserve districts had a modestly positive tone about the economy but noted that the presidential election is making some firms cautious about expanding activity.

The Fed's latest beige book report (https://www.federalreserve.gov/monetarypolicy/beigebook/default.htm)said that commercial real estate contacts "in several districts" cited only modest expectations for sales and construction activity moving forward, "due in part to economic uncertainty surrounding the November elections."

Stocks pared some losses after the release, with the S&P 500 down 1 point, or less than 0.1%, at 2,186, buoyed by gains in energy shares, which were boosted by a rise oil prices (http://www.marketwatch.com/story/oil-rallies-as-traders-brace-for-supply-data-2016-09-07).

See:Does S&P 500 need to 'drop before it can pop'? (http://www.marketwatch.com/story/does-sp-500-need-to-drop-before-it-can-pop-2016-09-07)

But a 0.8% drop in consumer-staples stock weighed on the large-cap gauge, led by a 13.8% drop in Sprouts Farmers Market Inc.(SFM), which tumbled after it cut its quarterly and 2016 guidance (http://www.marketwatch.com/story/sprouts-farmers-market-warns-on-outlook-2016-09-07). The sharp dropped pulled other grocery retailers lower, most notably Whole Foods Market Inc.(WFM) and Kroger Co.(KR).

The Dow Jones Industrial Average lost 18 points, or 0.1%, to 18,520, pressured by a 1% drop in Wal-Mart Stores Inc.(WMT)Home Depot Inc.(HD) but boosted by a 1.7% gain in Caterpillar Inc.(CAT).

And the tech-heavy Nasdaq Composite Index erased losses to turn positive, up 2 points, or less than 0.1%, at 5,278.

On the corporate front, all eyes were on Apple(AAPL) which unveiled its iPhone 7 at an event in San Francisco.

Apple shares were down 0.1% during its flagship product event. An analysis from UBS found that the tech major's stock tends to trade lower leading into its flagship September event, then rebounds in the run-up to the actual release (http://www.marketwatch.com/story/how-apples-stock-tends-to-trade-around-its-september-event-2016-09-06) of the new hardware a few weeks later.

American depositary receipts for Japan's Nintendo (7974.TO) surged more than 26% (http://www.marketwatch.com/story/nintendos-us-listed-shares-surge-as-games-come-to-iphone-and-apple-watch-2016-09-07) in strong volume after Apple said it would add the company's popular Super Mario Run game to its app store and put Pokémon Go on the Apple Watch.

Read:How to get Apple's new iPhone 7 free (http://www.marketwatch.com/story/how-to-get-apples-new-iphone-7-for-free-2016-09-03)

Wednesday's muted action came after U.S. stocks logged small gains on Tuesday (http://www.marketwatch.com/story/us-stocks-set-to-open-higher-as-traders-return-from-holiday-2016-09-06) when a disappointing services-sector report fueled expectations the Fed won't raise interest rates at its Sept. 20-21 meeting.

San Francisco Fed President John Williams late Tuesday said he still backs a rate increase "sooner rather than later," (http://www.marketwatch.com/story/feds-williams-still-backs-rate-hike-sooner-rather-than-later-2016-09-06) repeating comments he made before the release of the disappointing August jobs report. (http://www.marketwatch.com/story/economy-adds-151000-new-jobs-in-august-2016-09-02)

(http://www.marketwatch.com/story/economy-adds-151000-new-jobs-in-august-2016-09-02)On a more positive note, the Labor Department said on Wednesday that job openings soared to an all-time high (http://www.marketwatch.com/story/job-openings-soar-to-all-time-high-of-59-million-in-july-2016-09-07)of 5.9 million in July, a sign that the labor market is more fluid.

Still, many investors were reluctant to pencil in an imminent rate rise. "I would discount what the Fed governors are saying," said James Abate, chief investment officer at Centre Asset Management LLC.

Recent data, including weak reports on gross-domestic-product growth, industrial production and capital spending, suggest that "the Fed is in the box," as policy makers are hinting at a potential rate increase, which the economic cycle is "in a period of deceleration.

But regardless of what the Fed does, there is ample bearishness among analysts based on the usual suspects of ultraloose monetary policy by dovish central banks across the world, investor complacency and suppressed volatility, said Kent Engelke, chief economic strategist at Capitol Securities Management.

In this context, a 25-basis-point interest rate increase wouldn't be a fundamental reason for a market collapse--but rather an emotional trigger for investors, Engelke added.

Movers and shakers:Chipotle Mexican Grill Inc.(CMG) jumped 5.7% after Bill Ackman's Pershing Square Capital Management LP late Tuesday disclosed it has bought a 9.9% stake in the fast food chain (http://www.marketwatch.com/story/bill-ackmans-pershing-square-takes-big-stake-in-chipotle-2016-09-06).

Advanced Micro Devices Inc.(AMD) lost 7%, after late Tuesday announcing plans to raise more than $1 billion (http://www.marketwatch.com/story/amd-plans-stock-offering-while-trading-near-5-year-high-shares-drop-2016-09-06) through a stock and debt offering.

Other markets: Stocks in Asia closed mixed (http://www.marketwatch.com/story/asian-stocks-make-gains-though-soaring-yen-weighs-on-nikkei-2016-09-07), but Japan's Nikkei was shoved 0.4% lower, pressured by a stronger yen.

European markets (http://www.marketwatch.com/story/european-stocks-seesaw-after-german-industrial-data-disappoint-2016-09-07) were mostly higher, but struggled for firm direction.

Gold moved lower, while the dollar traded mixed against other major currencies (http://www.marketwatch.com/story/dollar-slides-against-yen-on-boj-easing-skepticism-2016-09-07) (http://www.marketwatch.com/story/dollar-slides-against-yen-on-boj-easing-skepticism-2016-09-07)but fell markedly against the yen on growing skepticism that the Bank of Japan may not be able to take aggressive easing measures at its policy meeting later this month.

(END) Dow Jones Newswires

September 07, 2016 15:25 ET (19:25 GMT)

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