Apple drops sharply after another downgrade
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U.S. stock-market indexes pulled back on Monday, driven by a second straight session of firm losses in technology shares.
The tech-heavy Nasdaq Composite Index , which hit an all-time high only to close down 1.8% on Friday, was under pressure, with the index down by 47 points, or 0.8%, to 6,159.
While, at first, losses in broader indexes were largely contained, the slump started spreading. The S&P 500 index declined 8 points, or 0.3%, to 2,424., with seven out of the benchmark's 11 sectors trading lower. The technology sector was leading its losses, down 1.2%, while telecom and energy shares were up 0.9%.
The Dow Jones Industrial Average declined 70 points, or 0.3%, to 21,202, as losses in shares of Apple Inc.(AAPL) and UnitedHealth Group Inc.(UNH) offset gains from shares of General Electric Co. (GE), Chevron Corp.(CVX) and Exxon Mobil Corp.(XOM)
Friday's tech selloff wasn't surprising given how sharply these shares rallied over the past 12 months, said Karyn Cavanaugh, senior market strategist at Voya Financial.
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"It could be a little concerning, because just as the tech has been leading the market on the upside, they can lead the market down as well," Cavanuagh said. "However, tech earnings have been particularly strong and given improving fundamentals, any swoon should be a buying opportunity for investors," she added.
On Friday, the Nasdaq Composite lost 1.8%, with its sharp pullback (http://www.marketwatch.com/story/nasdaq-is-threatening-to-log-its-biggest-blown-lead-in-212-months-as-tech-unravels-2017-06-09) coming after big recent gains for heavyweight tech stocks. The selloff (http://www.marketwatch.com/story/us-stocks-tipped-for-more-gains-as-investors-weigh-up-uk-election-results-2017-06-09) also followed a warning from Goldman Sachs analysts that highfliers such as Facebook Inc.(FB), Amazon.com Inc.(AMZN), Apple, Microsoft Corp.(MSFT) and Google parent Alphabet Inc.(GOOGL) (GOOGL) may be overextended. Meanwhile, shares of Netflix Inc.(NFLX) slipped into correction territory (http://www.marketwatch.com/story/netflix-shares-fall-into-correction-territory-before-bouncing-back-2017-06-12). But not all tech stocks (http://www.marketwatch.com/story/the-surprise-tech-stocks-that-are-bucking-the-selloff-2017-06-12) were getting caught up in the selloff.
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Howard Gold:It's all over for the FAANG stocks (http://www.marketwatch.com/story/its-all-over-for-the-faang-stocks-2017-06-12)
Economic news: May data on the U.S. federal budget is due at 2 p.m. Eastern Time.
As the week kicks off, investors are also focused on the Federal Reserve (http://www.marketwatch.com/story/all-eyes-on-tech-sector-ahead-of-expected-fed-interest-rate-hike-2017-06-10), which on Wednesday is widely anticipated to deliver an interest-rate hike.
Individual movers: Shares in Apple slumped 2.5% following a downgrade to neutral from buy by Mizuho Securities analysts (http://www.marketwatch.com/story/apple-downgraded-by-mizuho-the-second-ratings-cut-in-a-week-2017-06-12). Still, Apple shares are up 25% year to date, compared with 8.3% for the S&P 500.
It is the second time in a week that the gadgets giant has been downgraded, with the more bearish view once again stemming from concerns that optimism over the iPhone 8 has been baked into the stock.
Chip-gear maker Applied Materials Inc.(AMAT) and chip maker Nvidia Corp.(NVDA) were also among the S&P 500's biggest early morning losers. They were trading lower by 1.7% and 0.3%, respectively.
On the upside, General Electric Co.'s shares (GE) rose 3.8% following news that CEO Jeff Immelt is retiring (http://www.marketwatch.com/story/ges-jeff-immelt-to-step-down-as-ceo-and-chairman-2017-06-12-6914026) after nearly 16 years at the helm of the company and will be replaced by John Flannery, currently president and CEO of GE Healthcare.
Other markets:European equities (http://www.marketwatch.com/story/european-stocks-pushed-down-by-tech-selloff-british-governments-woes-2017-06-12) pulled back, and Asian markets closed with losses (http://www.marketwatch.com/story/asian-markets-slip-as-tech-stock-selloff-spreads-2017-06-11), as the tech selloff spread to exchanges there. Oil futures traded higher, while gold futures and a key dollar index were trading flat, Treasury yields inched higher, with the 10-year yield was down at 2.191%.
--Victor Reklaitis in London contributed to this article.
(END) Dow Jones Newswires
June 12, 2017 12:15 ET (16:15 GMT)