Markets Diverge as Apple Gets Hammered

NEW YORK ( TheStreet) -- Major U.S. stocks indices headed in different directions Wednesday as investor disappointment in Apple's ( AAPL) latest iPhone dampened the Nasdaq while gains by IBM ( IBM) boosted the Dow Jones Industrial Average.

The tech-heavy Nasdaq dropped 0.11% to 3,725.01 as Apple shares plummeted 5.4% to $467.83.

The S&P 500 gained 0.31% to 1,689.13 while the Dow Jones Industrial Average jumped 0.89% to 15,326.60.

Tech companies were boosting the blue-chip index as Microsoft ( MSFT) added 1.1% to $32.75 and United Technologies ( UTX) added 1.5% to $107.83. But IBM was the top Dow gainer as shares surged 2.2% to $190.70 after the company known as Big Blue said it will sell its customer-care outsourcing business to Synnex Corp. ( SNX) for $505 million. Synnex was popped 20.1% to $57.59.

Apple ( AAPL)'s decline came a day after the iPhone maker presented two new iPhones that failed to excite investors. One is the iPhone 5C, a unit to be priced as low as $99, while the second unit, the iPhone 5S is an upgrade that adds "Touch ID," a fingerprint sensor built into the home button. Overnight, Apple gained a license from China Mobile to begin launching iPhones for the first time on the Asian nation's largest wireless network.

Credit Suisse on Wednesday downgraded Apple to "Neutral" from "Outperform" as analyst Kulbinder Garcha but his 12-month target price to $525 a share. Apple was the worst performer in the S&P 500.

In economic news, the U.S. Census Bureau reported Wednesday that wholesale inventories for July rose 0.1%, which was a boost from the June reading of a 0.2% drop, but missed expectations among economists polled by Thomson Reuters who were expecting July inventories to have risen 0.3%.

Additionally, the Energy Information Administration reported that crude oil inventories dipped 200,000 barrels, while gasoline and distillates added 1.7 million and 2.6 million barrels, respectively. Cindy Wexler, an independent trader at the New York Mercantile Exchange, said in an interview that in the oil trade the petroleum status report was a secondary factor to the situation involving Syria.

West Texas Intermediate light sweet crude at the NYMEX closed higher for the first time this trading week as the October contract rose 17 cents to settle at $107.56 a barrel for the October contract. Energy stocks Newfield Exploration ( NFX) and WPX Energy ( WPX) were the top two gainers on the S&P, rising 7.5% and 4.7%, respectively.

Verizon ( VZ) will sell as much as $49 billion worth of bonds to raise the funds needed to buy Vodafone ( VOD) from their Verizon Wireless joint venture, The Wall Street Journal reported. Shares closed incrementally higher at $46.52.

Texas Instruments ( TXN) narrowed its earnings guidance for the third quarter. The chipmaker said Tuesday that it expects to earn between 51 cents and 55 cents a share in the quarter, which was lower than the previous guidance of 49 cents to 57 cents a share. Analysts have predicted earnings of 53 cents a share. Company shares dropped 0.69% to $40.03.

Investors appeared to absorb President Barack Obama's nationwide address Tuesday night on Syria in which he proposed a diplomatic solution with Russia's aid to seize Syria's chemical weapons arsenal thereby avoiding a military intervention in the Middle Eastern nation. Obama did reiterate that, if necessary, a limited targeted strike could be used to achieve a clear goal: "deterring the use of chemical weapons and degrading Assad's capabilities."

"The Syria address last night by the president, I think, just no surprised there went as expected," said Kent Croft, portfolio manager with Croft Leominster. "There are not any big surprises out there right now."

European markets closed higher on Wednesday. The FTSE 100 in London was up 0.07%, and the DAX in Frankfurt added 0.58%.

-- Written by Joe Deaux in New York.

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