Investing.com – U.S. stocks made a poor start to the week, closing in negative territory, as investors continued to ditch tech stocks, extending the tech tumble for a second straight day.
A slump in shares of Apple, reflected investor sentiment on tech stocks, as they mulled over a downgrade to Apple’s stock from Mizuho.
A slump in shares of megacap tech companies, led by Apple, weighed on the broader market, after Mizuho downgraded Apple’s stock to neutral from buy and lowered its price target to $150 from $160.
Mizuho stoked fears that the valuation of the technology giant may have peaked, after the bank noted that strong iPhone 8 sales in the upcoming production cycle, may have already been priced into Apple’s shares at recent levels.
"We believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside from here on out," Mizuho managing director, Americas research, Abhey Lamba, said in a Sunday note.
Some analysts, however, remained optimistic about investment opportunities in U.S. equity markets, expressing the need to look at different sectors for growth.
“We think the main sector driver will be Financials.” Morgan Stanley said in a research report to clients. “Additional positive catalysts are that the sector remains significantly under-owned, Banks have executed on prudent expense management and the potential for financial deregulation still exists.”
The current tech dump narrative dominating moves in U.S. equities could potentially shift as investors look ahead to the upcoming Federal Reserve interest rate decision on Wednesday, followed by a press conference from Fed chair Janet Yellen.
Investors are expected to pay close attention to the press conference for any clues on the Fed’s plan to reduce its $4.5 trillion balance sheet later this year and any possible shift in tone on future interest rate increases in the wake of weak U.S. economic data.
The U.S. economy created far fewer jobs than expected in the month of May while a slump in energy prices is expected to weigh on the pace of inflation.
In corporate news, General Electric CEO Jeff Immelt announced that John Flannery, current president and CEO of GE Healthcare, will take over as chief executive in August.
The Dow Jones Industrial Average closed lower at 21,235.67. The S&P 500 lost 0.10% while the Nasdaq Composite closed at 6175.46, down 0.52%. The Nasdaq lost more than 100 points at close on Friday.
The ‘Bulls and Bears’ on Wall Street
The top Dow gainers for the session: General Electric Company (NYSE:GE) up 3.6%, Chevron Corporation (NYSE:CVX) up 1.5%, while Walt Disney Company (NYSE:DIS) rose 1.3%.
Apple Inc (NASDAQ:AAPL) down 2.4%, McDonald’s Corporation (NYSE:MCD) down 2% and UnitedHealth Group Incorporated (NYSE:UNH) down 1.2%, were among the worst Dow performers of the session.