Stocks were weaker throughout the session ahead of the Federal Reserve's release of its June FOMC meeting minutes on Wednesday and Fed Chairman Jerome Powell's testimony this Wednesday and Thursday. Adding to the downbeat tone of the market to start the week were a downgrade of Apple (AAPL), a profit warning from a global chemical making giant and a major restructuring announcement from Germany's biggest bank.
ECONOMIC EVENTS: In the U.S., consumer credit for the month of May grew $17.1B, compared to the consensus view for the month of $17B.
TOP NEWS: Shares of Deutsche Bank (DB) trading in New York fell 6% after the bank announced it will reduce its workforce by 18,000 employees by 2022 as part of a broad restructuring plan. The bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation, plans to resize its Fixed Income operations, and will accelerate the wind-down of its existing non-strategic portfolio. Deutsche Bank said it will implement a cost reduction program designed to reduce adjusted costs to EUR 17B in 2022, is targeting a cost income ratio of 70% in that year, and said its management intends to fund its transformation from its existing resources without requiring additional capital.
Meanwhile, BASF (BASFY) shares in New York dropped 5% after the chemical giant cut its fiscal 2019 outlook, saying it sees "considerably lower" EBIT before special items for the year. The company warned that its second quarter figures are "significantly below current analyst estimates" as "significantly weaker-than-expected industrial production" negatively impacted volumes and margin development. The company, which repeated that it intends to cut 6,000 positions worldwide by the end of 2021, noted that the "conflicts between the United States and its trading partners, particularly China, have not eased - contrary to what was assumed in the BASF Report 2018."
Apple shares saw selling pressure, falling 2% after Rosenblatt analyst Jun Zhang downgraded the stock to Sell from Neutral, citing his view that the company's fundamentals will deteriorate over the next 6-12 months. While Zhang cut his rating to Sell, he does not see Apple as a stock to short, noting that the company has "plenty of cash and a meaningful stock buy back program," the analyst added.
In M&A news, Crane (CR) announced that the company has increased the price to be paid in its tender offer to purchase all outstanding shares of Circor (CIR) to $48 from $45 per share in cash. The latter responded by stating that its board will "carefully review and evaluate Crane's revised tender offer to determine the course of action that it believes is in the best interests of Circor and its shareholders."
MAJOR MOVERS: Among the noteworthy gainers was Sangamo (SGMO), which rose 1% after announcing updated results from the Phase 1/2 Alta study evaluating investigational SB-525 gene therapy for severe hemophilia A. Also higher was M.D.C. Holdings (MDC), which gained 10% after the company reported a 32% year-over-year increase in its second quarter net new home orders.
Among the notable losers was Intra-Cellular (ITCI), which fell 13% after its Study 401 of lumateperone did not its meet primary endpoint. Also lower was CannTrust (CTST), which declined 22% after receiving a compliance report from Health Canada notifying the company that its greenhouse facility in Pelham, Ontario is non-compliant with certain regulations.
INDEXES: The Dow fell 115.98, or 0.43%, to 26,806.14 , the Nasdaq lost 63.41, or 0.78%, to 8,098.38, and the S&P 500 declined 14.46, or 0.48%, to 2,975.95.
