July 8, 2019 / 1:08 PM / 2 months ago

US STOCKS-Wall St set to open lower as aggressive rate cut hopes recede

* Apple falls as Rosenblatt downgrades to ‘sell’

* Boeing slips as Saudi airline dumps MAX order

* Fed Chair Powell’s semi-annual testimony on July 10-11

* Futures down: Dow 0.29%, S&P 0.23%, Nasdaq 0.36% (Adds comment, details: Updates prices)

By Medha Singh

July 8 (Reuters) - Wall Street was set to open lower on Monday, as investors scaled back bets of an aggressive interest rate cut by the Federal Reserve later this month following a solid June jobs report.

Hopes that the U.S. central bank would cut rates to counter any hit to economic growth from a prolonged U.S.-China trade dispute had helped Wall Street’s main indexes rebound from a slump in May and hit record closing highs last week.

While a rate cut is expected at the Fed’s July 30-31 meeting, the surprisingly strong U.S. jobs data on Friday has led traders to reassess how sharply the central bank would lower key lending rates.

Bets of a 50 basis point cut have plunged to 1.8%, from about 20% a week ago, according to CME Group’s FedWatch program.

The market is carrying over some of the sentiment from Friday, said Art Hogan, chief market strategist at National Securities in New York.

“It’s a very light catalyst day... I think the markets should hold off until we here testimony from Chairman Powell.”

Fed Chairman Jerome Powell’s semi-annual testimony to the U.S. Congress on July 10-11 will give investors an opportunity to look for cues on the near-term monetary policy outlook. Also on tap is the central bank’s June policy meeting minutes, scheduled for release on Wednesday.

“We’re kind of in middle ground here with a real contemplation of would you rather have a rate cut or an improving economy,” Hogan said.

At 8:35 a.m. ET, Dow e-minis were down 78 points, or 0.29%. S&P 500 e-minis were down 6.75 points, or 0.23% and Nasdaq 100 e-minis were down 28 points, or 0.36%.

Morgan Stanley’s decision to cut exposure to global equities due to misgivings about the ability of policy easing to offset weaker economic data also weighed on sentiment.

The attention is now expected to turn to the start of the second-quarter earnings season next week. Profits for S&P 500 companies are expected to dip 0.1% year-over-year, according to IBES Refinitiv data.

Among stocks, Apple Inc’s shares fell 1.5% premarket after Rosenblatt Securities downgraded to “sell” from “neutral”, becoming the third brokerage with a bearish call on stock.

Boeing Co’s shares declined 1.5% after Saudi Arabian budget airline flyadeal said it would not proceed with a provisional $5.9 billion order for the planemaker’s grounded 737 MAX aircraft, instead opting for a fleet of Airbus A320 jets.

“You’re going to have an outsized Apple, Boeing impact on the market because it’s a quiet day otherwise,” Hogan said.

Chip equipment makers dropped as D.A. Davidson & Co changed its industry rating to “neutral”. Shares of Applied Materials Inc, Lam Research Corp and Ichor Holdings Ltd fell between 1.6% and 3%.

Symantec Corp rose 5% after Jefferies said the cybersecurity firm is a “logical financial acquisition” amid reports Broadcom Inc in advanced talks for a deal.

Reporting by Medha Singh and Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila

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