While you were sleeping: Apple soars, bucks trend

BUSINESSDESK: Last week's rally proved a little too hard to sustain as investors reassessed equity valuations near five-year highs. Still, shares of Apple were deemed to contain plenty of value as iPhone 5 sales already set records.

US economic data were disappointing, providing little incentive to commit fresh funds on Wall Street. Factory activity in New York state shrank for a second straight month in September, according to a report from the Federal Reserve Bank of New York says.

A separate report suggests the uncertainty itself has hurt economic activity, pushing the US jobless rate higher than it would have been in times of higher confidence, San Francisco Fed research advisers Sylvain Leduc and Zheng Liu report.

"Our model estimates that uncertainty has pushed up the US unemployment rate by between one and two percentage points since the start of the financial crisis in 2008," Leduc and Liu write.

"To put this in perspective, had there been no increase in uncertainty in the past four years, the unemployment rate would have been closer to 6% or 7% than to the 8% to 9% actually registered."

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.33%, the Standard & Poor's 500 shed 0.44%, while the Nasdaq Composite Index declined 0.36%.

And in Europe, the Stoxx 600 Index ended the day with a 0.3% slide from the previous close. National benchmark stock indexes in Germany, France and the UK moved lower, too.

"Everyone is still reeling from last week – that is part of it," Stephen Massocca, managing director at Wedbush Morgan in San Francisco, told Reuters. "But on the other hand, it starts to become increasingly more difficult to pull the trigger on buy orders at these valuations."

The hesitation about equity valuations supported US Treasuries. The 30-year bond yield fell six basis points to 3.03% in New York, according to Bloomberg Bond Trader prices. The 10-year yield fell three basis points to 1.83% after rising 20 basis points last week.

Shares of Apple bucked the general trend, rising to a record $US699.54 earlier in the session, after the company said advance sales of its iPhone 5 surpassed two million units in one day.

Meanwhile, tensions between Japan and China over the territorial rights to a group of islands risk serious economic implications as Asia's largest economies are already battling a slowdown.

The worst diplomatic crisis between the two countries since 2005 might hurt a trade relationship that has tripled in the past decade to more than $US340 billion, according to Bloomberg.

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