Stock Market News for June 13, 2017

The Nasdaq recorded its biggest two-day decline since December, sending broader markets lower on Monday. The recent downgrade of tech giant, Apple by Mizuho Securities sustained the tech selloff that began on Friday. Shares of Facebook, Google parent Alphabet, Amazon, Apple and Microsoft suffered a second day of decline that began on Friday after Goldman Sachs declared that these five companies' recent outperformance was overvalued. Meanwhile, General Electric's shares moved north following news that the company's CEO Jeff Immelt will be replaced by John Flannery.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) declined 0.2% to close at 21,235.67. The S&P 500 fell 0.1% to close at 2,429.39. The tech-laden Nasdaq Composite Index declined 0.5% to close at 6,175.46. The fear-gauge CBOE Volatility Index (VIX) traded near 11.4 on Monday. Advancers outnumbered declining stocks on the NYSE by 1,582 to 1,187.

Technology Shares Continue to Decline

Technology shares continued to decline for the second successive session on Monday, as investors continued to sell off technology shares. Almost all of the losses on Monday came from drop in shares of large tech stalwarts including FAANG - Facebook FB , AMZN , Apple AAPL , Netflix NFLX and Alphabet GOOGL that have outperformed the broader market in recent months.

Shares of Apple dropped on Sunday after Mizuho Securities downgraded the company from Buy to Neutral. Apple was downgraded by Mizuho Securities on the ground that the best-case scenario for the tech giant has is already built into prevailing prices for the company's shares. As per Mizuho, Apple has limited upside to estimates going forward. Shares of Apple declined 2.5%, following the downgrade. Major technology stalwarts such as Facebook and Microsoft MSFT both declined by 0.8%, while Amazon and Alphabet recorded a decline of 1.4% and 0.9%, respectively. Shares of Netflix declined by 4.2%.

Technology shares also suffered a major setback following the release of a report from Goldman Sachs GS on Friday which issued warnings on valuations of tech giants such as Facebook, Amazon, Apple, Microsoft and Alphabet. Investors appeared to be in a cautious mood about the overvaluation of technology companies following the release of the report.

Goldman Sachs pointed out that the volatility in Facebook, Amazon, Apple, Microsoft and Alphabet is less than not only the S&P 500, but also the utilities and staples sector. As per the report, tech stocks are less volatile, warning investors that they shouldn't expect the tech stocks to continue to rally for long run.

The drop in technology shares had a negative impact on the broader markets. The broader Technology Select Sector SPDR (XLK) fell 0.6%, and emerged as the worst performing sector of S&P 500. The Technology Select Sector broke below its 50-day moving average for the first time since April 18. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here

Energy Shares and Financials Pare Losses

Oil prices increased on signs of decline in inventory and as investors digested the news that Saudi Arabia has decided to limit crude volumes to some Asian nations in next month. The broader Energy Select Sector SPDR (XLE) increased 0.7%, emerging as the best performing sector of S&P 500.

Meanwhile, financials moved north on Monday, as expectations for a June rate hike in the Fed meeting scheduled to occur this week heightened. Banks are the first gainers when central bank raises key interest rates.

As per the CME FedWatch tool, the probability of a rate hike at the Fed's June 13-14 meeting held steady at more than 95.8%. According to a report released by the Treasury Department, budget deficit was at $88 billion for May, increased from $53 billion a year ago.

However, shares of General Electric Company GE rose 3.6% after the company announced that the General Electric's CEO Jeff Immelt will be replaced by John Flannery on August 1.

Stocks that made Headlines

FedEx Hits 52-Week High Driven by 25% Dividend Hike

Shares of FedEx Corporation FDX scaled a 52-week high of $209.35 per share on Jun 12, 2017 after the company announced a hike in its quarterly dividend by 25%. ( Read More )

Imax To Trim Workforce - Will Cost Savings Boost Growth?

In a bid to drive its bottom line and increase efficiencies, Mississauga, Canada-based entertainment technology company IMAX Corporation IMAX announced that it intends to trim its workforce by approximately 14%. ( Read More )

Zacks' 2017 IPO Watch List

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Netflix, Inc. (NFLX): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

General Electric Company (GE): Free Stock Analysis Report

Goldman Sachs Group, Inc. (The) (GS): Free Stock Analysis Report

Imax Corporation (IMAX): Free Stock Analysis Report

FedEx Corporation (FDX): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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