US Stock Market Overview – Stock Slide on Apple Downgrade

Deutsche Bank tumbles as it exits the equity markets
David Becker

US Stocks traded under pressure as losses in Apple shares pressured the broader tech sector, and weighed on the broader markets. Traders are in a holding pattern ahead of key testimony from the top Federal Reserve official Gerome Powell later this week. The Dow Jones Industrial Average traded down 0.45% points lower while the S&P 500 pulled back 0.6%. The Nasdaq Composite lagged, sliding 0.8%. The VIX volatility index pushed higher as the markets pulled back moving up 4.6%. Most sectors were lower, led down by Materials and financials, while defensive sectors such as Utilities and consumer staples bucked the trend.

Apple Shares Weigh on Broader Markets

Apple shares fell more than 2% after an analyst at Rosenblatt Securities downgraded them to sell from neutral. The analyst said the stock will “face fundamental deterioration over the next 6 to 12 months ” as Apple’s iPhone sales disappoint and growth in other products slows down. The decline in Apple shares weighed on the tech sector which has been a stalwart on Wall Street this year. The sector is up more than 27% in 2019 and is outperforming the S&P 500 by about 7%.

Fed Chair Powell’s Testimony will Be Closely Watched

Fed chair Powell’s testimony has become more significance following a robust US jobs report on Friday. Recall that non-farm payrolls increased by 224K jobs compared to expectations that it would rise by 165K jobs.  Some fear that if the Fed delivers a rate cut in July, it would be seen as capitulating to President Trumps demand. The market is currently pricing in one rate cut in 2019, compared to 2-rate cuts ahead of the payroll report. The Fed chair is scheduled to testify in front of Congress on Wednesday and Thursday this week.

Deutsche Bank Tumbles as it Exit Equities

Deutsche Bank announced that it was firing staff from its investment bank on Monday. Its investors will need to wait much longer to discover how the German lender’s radical restructuring will affect them. The company announced over the weekend that it was exiting the equity business and firing 18K employees. Shares in the troubled global banking group fell sharply as investor skepticism set in during Monday’s trade. The stock was down as much as 7.25% in the afternoon, its biggest one-day fall this year and a big reversal from a rise of more than 4% shortly after the open. It finished the day down 5.4%.

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