WFM Whole Foods Market, Inc.

By Ellie Ismailidou and Sara Sjolin, MarketWatch

Beige book says presidential election making businesses cautious; Apple releases iPhone 7

The S&P 500 and the Dow lost a little ground Wednesday, 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.

But the Nasdaq Composite eked out a gain and closed at a record high as tech stocks rallied, helped in part by Apple Inc.(AAPL) which rose 0.6% after unveiling the iPhone 7 at its flagship product event in San Francisco.

The Fed's latest beige book report (https://www.federalreserve.gov/monetarypolicy/beigebook/default.htm), meanwhile, was viewed as providing more fodder for the central bank, as it contemplates an interest-rate increase in the near term.

Stocks pared some of losses after the release, with the S&P 500 ending down less than a point at 2,186.15, 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) followed by tech stocks. The S&P 500 has now gone 50 consecutive sessions without a daily drop of more than 1%.

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)

A 0.9% drop in consumer-staples stock weighed on the large-cap gauge, led by a 13.7% 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 12 points, or 0.1%, to finish at 18,526, pressured by a 1.3% drop in Wal-Mart Stores Inc.(WMT) and a 1% loss in Home Depot Inc.(HD), partly offset by a 2% gain by Caterpillar Inc.(CAT).

And the tech-heavy Nasdaq Composite Index rose 8 points, or 0.2%, to a record close of 5,283.93, helped by Apple's event.

Among individual stocks, 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 overall 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 5.9% 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 6.8%, 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 declined 0.4%, pressured by a stronger yen.

European markets (http://www.marketwatch.com/story/european-stocks-seesaw-after-german-industrial-data-disappoint-2016-09-07) were ended higher.

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 16:33 ET (20:33 GMT)

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