Wall Street indexes ended the trading session on Monday into the red after the fall of Apple’s stocks put pressure on the entire technology sector. At the same time, investors are expecting key Federal Reserve data later this week.
The blue-chip index Dow Jones Industrial Average declined by 115.98 points, or 0.4%, to 26,806.14 points, while the broader S&P 500 declined by 0.5% to 2,975.95 points. Meanwhile, the technology benchmark Nasdaq Composite fell by 0.8%.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 5.12% to 13.96.
The technology sector had a strong performance this year. The sector enjoys a 27% growth in 2019 and performs better than the S&P 500 by about 7 percentage points.
However, AB Bernstein’s analyst Toni Sacconaghi is worried that the industry is targeting too high ratings.
“Risk in the technology sector is rising, especially in high valued stocks”, said Toni Sacconaghi.
At the same time, Wall Street expects the statement by Federal Reserve Chairman Jerome Powell this Wednesday. It will be made after better-than-expected labor market data that raised the question of whether the Fed would curtail interest rates later this month.
Late Friday, President Donald Trump — who has long called for the Fed to lower rates and stimulate the economy — tweeted that “our Federal Reserve doesn’t have a clue! They raised rates too soon, too often, & tightened, while others did just the opposite”. Trump added that the most difficult problem for the United States “is not our competitors, it is the Federal Reserve”. Donald Trump’s mounting attacks on Fed policy and Chairman Jerome Powell have raised concerns about the central bank’s independence from the government.
The yield on the 10-year US Treasury note fell to its lowest level in nearly three years last week, while the yield on the 3-month treasury has been higher than the 10-year for 30 consecutive trading days.
Corporate stocks performance
The stocks of Apple lost more than 2% of its value after an analyst at Rosenblatt Securities lowered its assessment for the company’s shares from “neutral” to “sell”. The analyst said the deal would “face a fundamental deterioration in the next 6 to 12 months”, while iPhone sales are disappointing and the growth of other product categories is slowing down.
Other technology stocks, such as NetApp and Juniper Networks, recorded declines of more than 3% each. Applied Materials and Lam Research retreated more than 1%.
The stocks of Symantec Corp rose by 2.4% after Bloomberg reported that former Chief Executive Officer Greg Clark has teamed up with private-equity firms Advent International and Permira Holdings to attempt to make a counteroffer to Broadcom’s reported takeover attempt. Broadcom is still seen as the favorite in the race for Symantec’s assets.
The sportswear manufacturer Nike Inc and the consumer goods corporation Procter & Gamble Company were the best performers within the blue-chips, while the shares of Walmart Inc rose to all-time highs, adding 0.69%.
The stocks of Boeing Co fell by 1.3% on Monday, after a Saudi Arabian airline canceled a deal valued at more than 5.5 billion USD, deciding to give its business to rival Airbus SE. The loss comes amid questions regarding the safety of the 737 Max, after two fatal crashes since October.
Meanwhile, the shares of the 3D printer maker Nano Dimension Ltd fell to all-time lows, declining by 19.23%, after the company planned to cut its employee workforce by some 20% to reduce costs and has appointed an adviser to help it conduct a “review of strategic alternatives”.
The stocks of the Canada-based cannabis firm CannTrust Holdings Inc fell by 22.5% after the company said that its greenhouse facility in Pelham, Ontario was deemed “noncompliant” by regulators.
The top performers on the S&P 500 were Signet Jewelers Ltd (+5.31%), Edison International (+3.14%) and Western Digital Corporation (+2.78%), while on the flipside were IPG Photonics Corporation (-5.21%), DaVita HealthCare Partners Inc (-4.75%) and Navient Corp (-4.40%).