While you were sleeping: Apple helps shift focus

BUSINESSDESK: Apple helped turn the mood on Wall Street – at least temporarily – away from economic pessimism amid expectations it is about to reveal its latest iPhone.

At a September 12 product event in San Francisco, Apple is expected to introduce a new iPhone with a larger screen and thinner body, Bloomberg News reported. It sent out invites to the event today.

In late afternoon trading in New York, the Standard & Poor's 500 rose 0.09%, while the Nasdaq Composite Index gained 0.38%. Earlier in the day, the S&P 500 was down 0.7%. The Dow Jones Industrial Average was last 0.15% weaker.

The day began with a report showing US manufacturing activity shrank for a third straight month and weighed on investors returning to markets after yesterday's Labor Day holiday. Today's report adds to the manufacturing gloom in Europe and China.

The Institute for Supply Management's factory index slid to 49.6 in August from 49.8 in July.

"Overall, today's report keeps intact concerns that industrial output growth could slow to a crawl in the remaining months of 2012," JP Morgan economist Michael Feroli told Reuters.

Adding insult to injury, a separate reported showed that spending on construction projects unexpectedly declined in July, pouring cold water on cautious hopes that the real estate market was finally starting to move beyond the doldrums within which it is languished for the past few years.

Speaking of doldrums, shares of Facebook hit another record low today after Morgan Stanley, a lead underwriter of the social network's initial public offering, lowered its price forecast.

Europe's Stoxx 600 Index ended the day with a 1.1% drop from yesterday's close. National benchmark equity indexes also fell in Germany, France and the UK.

Investors are pinning their hopes on the European Central Bank as president Mario Draghi is expected to detail bond-buying measures later this week. He told lawmakers in a closed-door session at the European Parliament in Brussels yesterday the bank has lost control of borrowing costs in the eurozone.

"The market is expecting some significant action from the ECB, but the ECB has disappointed many times," Larry Milstein, managing director in New York of government and agency debt trading at RW Pressprich & Co, a fixed-income broker and dealer for institutional investors, told Bloomberg.

"The question in everyone's mind is, "will the ECB's actions be sufficient in breadth and size?'"

After meeting in Rome, Italian Prime Minister Mario Monti and French President Francois Hollande heaped more pressure on Mr Draghi to act.

Mr Monti said he expected measures to remove "the serious obstacle of [bond] spreads that have no underlying economic justification" for Italy and other countries "doing our homework" on economic reform and deficit reduction.