U.S. stocks fell on Monday, pressured by a drop in Apple Inc and declines in healthcare stocks as investors toned down expectations of an aggressive interest rate cut by the Federal Reserve later this month.
A surprisingly strong U.S. jobs data on Friday has forced traders to temper hopes of a sharp rate cut at the central bank’s July 30-31 policy meeting, even as a reduction is still expected.
Investors might get an opportunity to gauge near-term monetary policy thinking during Fed Chairman Jerome Powell’s semi-annual testimony to the U.S. Congress on July 10-11.
Do not expect any big surprises to come out of Powell’s testimony, but any type of surprise on the inflation numbers that come out later this week come move markets from current levels, Chris Larkin, senior vice president, trading at E*TRADE Financial Corp said.
Also on tap is the central bank’s June meeting minutes, scheduled for release on Wednesday.
Apple Inc (AAPL.O) fell 2% and was the biggest drag on all the three main Wall Street indexes. Rosenblatt Securities downgraded the iPhone maker’s shares to “sell” from “neutral”, and said it expected the company to face “fundamental deterioration” in the next six to twelve months.
The drop in Apple led to a 0.89% fall in the technology .SPLRCT sector. The healthcare sector .SPXHC dropped 1.08% weighed down by President Donald Trump’s recent statement about an upcoming executive order that would lower prescription drug prices.
At 12:48 p.m. ET the Dow Jones Industrial Average .DJI was down 135.93 points, or 0.50%, at 26,786.19, the S&P 500 .SPX was down 17.66 points, or 0.59%, at 2,972.75 and the Nasdaq Composite .IXIC was down 75.50 points, or 0.93%, at 8,086.29.
Investor attention is also expected to turn to the start of the second-quarter earnings season next week. Profits for S&P 500 companies are expected to dip 0.1% year-over-year, according to Refinitiv IBES data.
“The results for S&P 500 companies are expected to be underwhelming … investors are likely to look beyond the uninspiring headline number,” Jonathan Golub, chief U.S. equity strategist at Credit Suisse said.
“Company-specific issues at several large tech companies and Boeing are expected to detract from second-quarter results.”
Boeing Co (BA.N) fell 1.4% after Saudi Arabian budget airline flyadeal said it would not proceed with a provisional $5.9 billion order for the planemaker’s grounded 737 MAX aircraft, instead opting for a fleet of Airbus A320 jets.
Symantec Corp (SYMC.O) rose 3.5% after Jefferies said the cybersecurity firm is a “logical financial acquisition” amid reports of Broadcom Inc (AVGO.O) in advanced talks for a deal.
The S&P index recorded 14 new 52-week highs and no new low, while the Nasdaq recorded 33 new highs and 38 new lows.