por admin » Lun Jul 08, 2019 4:40 pm
Dow falls more than 100 points as Apple leads tech slide, Wall Street awaits Powell testimony
PUBLISHED 15 HOURS AGO UPDATED 1 HOUR AGO
Fred Imbert
@foimbert
CNBC.COM
Stocks fall triple digits as Apple leads tech slide—here's what 5 experts have to say
Stocks fell on Monday as losses in Apple shares pressured the broader tech sector. Investors also braced for key testimony from the top Federal Reserve official later this week.
The Dow Jones Industrial Average traded 115.98 points, or 0.4%, lower to 26,806.14 while the S&P 500 pulled back 0.5% to 2,975.95. The tech-heavy Nasdaq Composite lagged, sliding 0.8% to 8,098.38.
Apple shares fell more than 2% after an analyst at Rosenblatt Securities downgraded the stock to sell from neutral. The analyst said the company will "face fundamental deterioration over the next 6 to 12 months" as Apple's iPhone sales disappoint and growth in other products slows down.
Other tech shares like NetApp and Juniper Networks fell more than 3% each. Applied Materials and Lam Research both declined more than 1%.
Tech has been a stalwart on Wall Street this year. The sector is up nearly 28% in 2019 and is outperforming the S&P 500 by about 10 percentage points.
However, AB Bernstein tech analyst Toni Sacconaghi is worried about the sector moving forward given its sky-high valuation and a deteriorating earnings picture.
"Risk is increasing in tech, especially with high priced stocks," Sacconaghi wrote in a note Monday.
"Part of tech's challenge is that it is comping against a tough 2018. Tech's earnings lagged the broader market last year, as tax reform more favorably impacted other sectors and expectations for 2020 don't improve dramatically."
Apple CEO Tim Cook
Spencer Platt | Getty Images
Apple CEO Tim Cook
Wall Street also looked ahead to testimony from Federal Reserve Chair Jerome Powell on Wednesday. Powell's testimony comes after a stronger-than-expected jobs report raised questions about whether the Fed will cut rates later this month.
"Friday's employment data took the market by surprise. That dampens the prospects of the Fed acting," said Peter Cardillo, chief market economist at Spartan Capital Securities. "They will have to collect further evidence" before deciding on their next monetary policy move.
Traders have priced in a 100% probability of a Fed rate cut in July, according to the CME Group's FedWatch tool. However, expectations for a more aggressive cut were tempered by the jobs data released Friday.
The Fed opened the door for lower rates last month after saying it will "act as appropriate" to maintain the current U.S. economic expansion, which is the longest ever.
"I think that this will be one of the most important weeks of Chairman Powell's 2019 career. I think the market has expectations of a quarter point at minimum rate cut at the end of July, yet the Fed really hasn't concluded that that is going to occur yet," Brett Ewing, chief market strategist of First Franklin Financial Services, told CNBC on Monday.
"This is the week that either Chairman Powell needs to guide the market into what they believe they are going to do that could be different or he needs to concur with the market," Ewing said.
The major indexes posted solid gains last week and notched all-time highs.
In corporate news, Deutsche Bank announced Sunday it will close off its global equities trading business and slash 18,000 jobs as part of a massive restructuring effort to improve the bank's profitability. The company's U.S.-listed shares dropped more than 6%.
—CNBC's Yun Li, Sam Meredith and Ryan Browne contri