Wall St. set to open lower as aggressive rate cut hopes recede

Wall Street slips with Apple, as hopes of sharp rate cut fade

"That's kind of concerning the market if just from the standpoint of the market's done well and now it's a matter of, were Friday's numbers too positive, and might we not get the cuts investors were hoping for", said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio.

Investors will closely analyse Powell's comments when he delivers his semi-annual monetary report before Congress to gauge how far the USA central bank will lower interest rates.

"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.

Shares of Apple fell almost 2.1 percent, as USA brokerage firm Rosenblatt Securities downgraded the company's stock to sell from neutral, citing "fundamental deterioration" of its shares due to gloomy iPhone sales and slowing growth in Apple's other products.

US stocks hit a record last week and a bond rally took yields to multiyear lows amid expectations the Fed will lower interest rates by at least a quarter of a percentage point at its July meeting.

"Expectations about the number and timing of rate cuts have changed slightly."The Dow Jones Industrial Average .DJI fell 115.98 points, or 0.43%, to 26,806.14, the S&P 500 .SPX lost 14.46 points, or 0.48%, to 2,975.95 and the Nasdaq Composite .IXIC dropped 63.41 points, or 0.78%, to 8,098.38".

Still, money markets are pricing in a 94% probability of a 25-basis-point rate cut at the Fed meeting on July 31, according to CME Group's FedWatch tool.

The focus now shifts to the Fed Chair Jerome Powell's scheduled speech.

Investors will be listening closely for any hints on the central bank's interest rate policy on Wednesday and Thursday, when Powell delivers the Fed's semi-annual monetary report to Congress.

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"The chances of a deeper correction must be considered as highly feasible now", said chief trader at Standard Bank Warrick Butler in a note.

Apple Inc (AAPL.O) fell 2.2% and was the biggest drag on the S&P 500 and Nasdaq.

The British pound was last quoted at $1.2515, within striking distance of $1.2481, its lowest since the "flash crash" on January 3 when the pound dropped to $1.2409.

The attention is now expected to turn to the start of the second-quarter earnings season next week.

Boeing shed 1.3 percent after Saudi budget carrier flyadeal withdrew an order for the grounded 737 MAX jets in favor of a fleet entirely composed of Airbus planes.

Volume on USA exchanges was 5.74 billion shares, compared to the 6.77 billion average for the full session over the last 20 trading days.

The S&P/TSX composite index was down 69.74 points at 16,472.25.

Declining issues outnumbered advancing ones on the NYSE by a 1.77-to-1 ratio; on Nasdaq, a 2.30-to-1 ratio favored decliners.

Apple's suppliers, such as Murata Manufacturing and Taiyo Yuden, fell 2% and 4%, however, after Rosenblatt Securities cited a "fundamental deterioration" for the US gadget giant over the next 6-12 months.

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