Stocks lose ground amid analyst downgrades, dampened rate-cut hopes
08-Jul-19 16:25 ET
Dow -115.89 at 26806.23, Nasdaq -63.41 at 8098.38, S&P -14.46 at 2975.95
briefing.com
[BRIEFING.COM] The S&P 500 lost 0.5% on Monday, pressured by analyst downgrades and waning hopes for a 50-basis points rate cut at the end of the month. With the major indices near record highs, investors adopted a cautious mindset in front of speeches from several Fed officials this week.
The Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite lost 0.8%, and the Russell 2000 lost 0.9%.
With more market participants presumably back from the holiday break, the market had a more comprehensive day to digest the better-than-expected June employment report that was released on Friday. Unlike Friday, though, where stocks rallied from session lows despite the subdued rate-cut expectations, Monday's session exhibited a lack of buying conviction.
Contributing to this lack of conviction were a slew of negative-minded analyst recommendations, which featured Apple (AAPL 200.02, -4.21, -2.1%) being downgraded to Sell from Neutral at Rosenblatt. Morgan Stanley, meanwhile, downgraded global equities to Underweight from Equal-Weight, citing a poor outlook for equities over the next three months.
Weakness in Apple contributed to the underperformance in the S&P 500 information technology sector (-0.7%). Losses from the materials (-1.1%), communication services (-0.9%), health care (-0.8%), industrials (-0.7%), and financials (-0.6%) sectors also hindered the broader market.
Selling was kept in check though, with the real estate sector (+0.4%) providing offsetting support, as the market was able to stay above Friday's session lows.
The market also appeared willing to wait to hear from several Fed officials throughout the week. Fed Chair Powell will speak three times this week, but most attention will likely be centered on his semi-annual monetary policy testimony on Capitol Hill on Wednesday and Thursday.
In other corporate news, shares of Boeing (BA 351.12, -4.74, -1.3%) underperformed the broader market amid news that a Saudi airline opted out of $5.9 billion 737 Max order in favor of Airbus.
U.S. Treasuries finished little changed in a quiet session. The 2-yr yield increased one basis point to 1.89%, and the 10-yr yield declined one basis point to 2.03%. The U.S. Dollar Index increased 0.1% to 97.41. WTI crude increased 0.2% to $57.40/bbl.
Reviewing Monday's lone economic data, the Consumer Credit report for May:
- Consumer credit increased by $17.1 billion in May (Briefing.com consensus $17.7 billion) on the heels of an unrevised $17.5 billion in April.
- The key takeaway from the report is that the increase was driven by growth in both nonrevolving and revolving credit.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for June and the JOLTS - Job Opening report for May on Tuesday.
- Nasdaq Composite +22.1% YTD
- S&P 500 +18.7% YTD
- Russell 2000 +15.8% YTD
- Dow Jones Industrial Average +14.9% YTD
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