Stocks fell on Monday as losses in Apple shares pressured the broader tech sector. Investors also braced for key testimony from the top Federal Reserve official later this week.
The Dow Jones Industrial Average traded 115.98 points, or 0.4%, lower to 26,806.14 while the S&P 500 pulled back 0.5% to 2,975.95. The tech-heavy Nasdaq Composite lagged, sliding 0.8% to 8,098.38.
Apple shares fell more than 2% after an analyst at Rosenblatt Securities downgraded the stock to sell from neutral. The analyst said the company will “face fundamental deterioration over the next 6 to 12 months ” as Apple’s iPhone sales disappoint and growth in other products slows down.
Tech has been a stalwart on Wall Street this year. The sector is up nearly 28% in 2019 and is outperforming the S&P 500 by about 10 percentage points.
However, AB Bernstein tech analyst Toni Sacconaghi is worried about the sector moving forward given its sky-high valuation and a deteriorating earnings picture.
“Risk is increasing in tech, especially with high priced stocks,” Sacconaghi wrote in a note Monday.
“Part of tech’s challenge is that it is comping against a tough 2018. Tech’s earnings lagged the broader market last year, as tax reform more favorably impacted other sectors and expectations for 2020 don’t improve dramatically.”