US STOCKS-Futures fall as Apple drops production increase, falling yields limit losses

BY Reuters | TREASURY | 09/28/22 08:02 AM EDT

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.)

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Apple (AAPL) down on report to drop iPhone production boost plans

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U.S. 10-yr Treasury yields back off 12-year highs

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Biogen soars on landmark Alzheimer's data

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Futures down: Dow 0.29%, S&P 0.51%, Nasdaq 1%

(Adds comments, details, updates prices throughout)

By Shreyashi Sanyal and Susan Mathew

Sept 28 (Reuters) - U.S. stock index futures fell on Wednesday led by Apple (AAPL) after it dropped plans to boost production of its new iPhones, but a pullback in benchmark Treasury yields from multi-year highs limited the decline.

Shares of the world's most valuable public company fell 3.7% in premarket trading after Bloomberg reported Apple (AAPL) had told suppliers to curtail efforts to increase assembly of its iPhone 14 product family by as many as 6 million units in the second half of this year.

"Apple (AAPL) has got so many pieces and any weakness in Apple (AAPL) demand has big knock-on impacts on many spaces, so chips, processing and the outlook for retail sales even," said Patrick Armstrong, chief investment officer at Plurimi Wealth.

The report on Apple's (AAPL) production cut added fuel to investors worried about the U.S. Federal Reserve's push to aggressively increase borrowing costs to tame stubbornly high inflation even at the risk of slowing down economic growth.

Other megacap growth names such as Amazon.com Inc, Microsoft Corp, Meta Platforms Inc (META) and Tesla Inc (TSLA) also fell between 0.6% and 2.1%.

Chipmakers Advanced Micro Devices, Qualcomm Inc Nvidia Corp and Micron Tech (MU) were down between 1.5% and 2.8%.

Still, a bit of relief for equity markets came from a Bank of England decision to buy as many long-dated government bonds as needed between now and Oct. 14.

The yield on the U.S. 10-year Treasury bill came off 12-year highs to hit the day's low of 3.886%, while Germany's 10-year government bond yield, the benchmark for the euro zone, fell after touching a 11-year high.

"Yields now are approaching the Fed's desired target level of 4 and 4.5%. So once that happens, we should see yields beginning to level off and that should boost equity prices," said Peter Cardillo, chief market economist, Spartan Capital Securities LLC.

"The market is very, very sold."

At 7:30 a.m. ET, Dow e-minis were down 85 points, or 0.29%, S&P 500 e-minis were down 18.75 points, or 0.51%, and Nasdaq 100 e-minis were down 113.75 points, or 1%.

In the previous session, Wall Street's main indexes sank deeper into a bear market, with the S&P 500 recording its lowest close in almost two years on rate hike worries.

Bucking the overall slide, Biogen surged 45.9% after its Alzheimer's drug, developed with Japanese partner Eisai (ESALF), succeeded in slowing cognitive decline.

Shares of Eli Lilly & Co, which is also developing an Alzheimer's drug, rose 7.7%. (Reporting by Shreyashi Sanyal, Susan Mathew and Ankika Biswas in Bengaluru; Editing by Vinay Dwivedi and Arun Koyyur)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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