Wall Street Swings Higher Ahead of Fed as Tech Stocks Recover

Ivan Schwartz
June 14, 2017

The S&P 500 technology sector .SPLRCT rose 0.7 percent, recovering from its biggest two-day decline in almost a year.

The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows. Nasdaq-100 futures advanced 16.75 points, or 0.3%, to 5,736. Seven of its 10 main sectors fell. On the Nasdaq, 1,545 issues rose and 839 fell. Amgen was up 1.5 at $166.61.

Mizuho Securities also cut its rating on Apple's stock to "neutral" from "buy" on Monday, citing it has outperformed this year and enthusiasm over the "upcoming product cycle is fully captured at current levels".

The Australian share market looks set to open lower, after Wall Street closed in the red when tech stocks fell.

In corporate news, Cheesecake Factory (CAKE.O) shares fell 9.9 percent after the restaurant chain warned of a decline in comparable store sales.Advancing issues outnumbered declining ones on the NYSE by a 2.39-to-1 ratio; on Nasdaq, a 1.89-to-1 ratio favoured advancers.About 6.4 billion shares changed hands in US exchanges, below with the 6.8 billion daily average over the last 20 sessions.

Apple shares have added to last week's drop to lead a USA markets downturn as tech, still the best performing S&P 500 sector this year, succumbed under its own weight.

"We note that Healthcare, Utilities and Staples are all outperformers in the United States year-to-date, along with Tech, so the internal rotation is evident even there".

"The expectation of a rate hike...is widely held, and has been reinforced by the most recent round of Fed communications", Michael Feroli, an economist with JP Morgan, told Reuters.

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"The risk of recession is still pretty low, so I think this (tech) selloff is not a harbinger".

The Dow edged down 36.30 points or 0.2 percent to 21,235.67, the Nasdaq fell 32.45 points or 0.5 percent to 6,1765.46 and the S&P 500 dipped 2.38 points or 0.1 percent to 2,429.39.

Investors are also likely to stay away from making big bets ahead of a near-certain interest rate hike from the Federal Reserve.

Another senior market analyst, Neil Wilson from ETX Capital, suggested the sell-off could have been triggered by a Goldman Sachs warning that some of the big tech stocks were looking a touch overvalued.

Coherus BioSciences tumbled 29 percent to $14.65 after the FDA denied the approval of its biosimilar for Amgen's Neulasta.

Advancing issues outnumbered decliners on the NYSE by 1,582 to 1,187.

The dollar index against a basket of currencies nudged down to 97.118, easing back from a nine-day high hit at the end of last week after U.S. President Trump navigated the testimony of ex-FBI chief James Comey.

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