The stock market didn't have any big moves on Friday morning, as investors were content to wait and see what news the weekend's G-20 meeting of global leaders in Osaka might bring. Market participants anticipate progress on the trade front, and optimism throughout the week has set a high bar for the world's most prominent politicians to surpass. As of just before 11:30 a.m. EDT, the Dow Jones Industrial Average (^DJI -0.98%) was up 33 points to 26,559. The S&P 500 (^GSPC -0.46%) gained 7 points to 2,932, and the Nasdaq Composite (^IXIC -0.64%) was higher by 17 points to 7,985.
In corporate news, Apple (AAPL 0.52%) faces the loss of one of the most important designers of the company's modern age, and some worry about what the departure might mean for the iPhone maker and its potential for future innovation. Meanwhile, savers who have had to deal with more than a decade of low rates on bank accounts and other savings vehicles got some bad news, and recent moves from Goldman Sachs (GS -0.71%) and Ally Financial (ALLY -1.56%) could be just the beginning of a trend that will hurt ordinary Americans once again.
A bite out of Apple
Shares of Apple were down almost 1% after a surprise announcement from the mobile device pioneer late Thursday. Jony Ive, Apple's chief design officer, has decided to terminate his employment with the Cupertino-based tech giant later this year.
Image source: Apple.
Even though Steve Jobs stood squarely in the public spotlight during Apple's periods of success, shareholders shouldn't underestimate the important role Ive had in producing blockbuster products. Ive's influence shows in everything from the earliest iMac desktop computers to the iPod, iPhone, and iPad product lines. The designer also worked on Apple's iOS operating system and even had a hand in designing layouts for Apple Store retail locations and the company's own corporate campus.
As often happens in Silicon Valley, Ive is setting out to start his own venture, dubbed LoveFrom. Yet one reason why Apple investors aren't in an outright panic is that Ive intends to keep working with Apple as an outside contractor, potentially pushing projects forward in much the same way he did as an employee. Moreover, Ive put respected successor designers in place in which the tech giant has confidence.
In the end, investors will have to wait and see how the relationship between Apple and LoveFrom evolves. For now, though, they seem hopeful that apart from a change in employment status, the relationship between Ive and his soon-to-be former employer will remain fruitful.
Getting ahead of the Fed
Meanwhile, shares of many U.S. banks were higher Friday morning, with Goldman Sachs picking up more than 2%. The key news on the financial front came from the Federal Reserve, which said that nearly all of the institutions under its supervision had passed its latest round of stress tests. Shareholders were happy to see their banks looking healthy.
Yet for bank customers, the news wasn't as good. Goldman's Marcus retail banking unit said late yesterday that it would cut the interest rate on its high-yield savings account from 2.25% to 2.15%. Ally Financial had made a similar move, cutting rates on a comparable account from 2.2% to 2.1%.
Even though the Fed hasn't yet officially cut rates, the bond market has already priced in likely reductions within the next few months. Goldman, Ally, and other companies used online savings accounts as a way to attract assets and were willing to pay premium interest rates to woo customers, but today's move shows that there's a limit to their benevolence.
Before the Fed started to raise rates a couple years ago, savings account rates well below 1% were commonplace. Unfortunately, if the central bank takes aggressive action, savings rates could head significantly lower in the next several months.
