Market Wrap: Stocks Drop on Apple, Interest Rate Worries

Financial Markets Wall Street
Richard Drew/AP
By Noel Randewich

NEW YORK -- Wall Street ended lower Tuesday for a third straight session as investors worried about a rise in interest rates while Apple (AAPL) shares hit their lowest in over six months.

The iPhone-maker's shares fell 3.2 percent to $114.64, firmly below their 200-day daily moving average, a key technical level closely watched by traders. The stock was the biggest drag on the three major U.S. indexes.

%VIRTUAL-pullquote-Apple has been the weak sister in the market today. But if you look at the sectors, most everything is down with the exception of materials.%A slowdown in China and skepticism over demand for iPhones were contributing to pressure on Apple's shares, traders said.

"Apple has been the weak sister in the market today," said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments in Atlanta, Georgia. "But if you look at the sectors, most everything is down with the exception of materials."

Stocks extended losses after Atlanta Federal Reserve President Dennis Lockhart told The Wall Street Journal that September may be the right time for Fed to lift interest rates.

The Dow Jones industrial average (^DJI) fell 0.3 percent to end at 17,550.69 and the Standard & Poor's 500 index (^GSPC) lost 0.2 percent to 2,093.32. The Nasdaq composite (^IXIC) dropped 0.2 percent finish at 5,105.55.

Eight of the 10 major S&P sectors fell, with the utilities index's 1.6 percent decline leading the losers.

The Fed has said it needs to see a sustained economic recovery before it raises interest rates for the first time in nearly a decade.

Soft economic data had prompted some investors to argue that the Fed might hold off on raising rates until December. After the Fed meeting last week, investors expected a rate increase in September.

'Mixed Bag'

"The market is getting such a mixed bag of rhetoric from the Fed, it seems like the Fed isn't sure what it's going to do," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

After the bell, shares of crafts website Etsy (ETSY) fell 9 percent and Walt Disney (DIS) lost 1.4 percent after the companies posted quarterly results that disappointed Wall Street.

During the session, American International Group (AIG) fell 2.8 percent after the insurer's underwriting income fell in almost all of its units, while home and auto insurer Allstate (ALL) fell 10.2 percent after its profit missed expectations.

Declining issues outnumbered advancing ones on the NYSE by 1.23 to 1. On the Nasdaq, 1,414 issues fell and 1,376 advanced for a 1.03-to-1 ratio favoring decliners. The benchmark S&P 500 index was posting 32 new 52-week highs and 26 new lows; the Nasdaq composite was recording 91 new highs and 127 new lows.

-Tanya Agrawal contributed reporting.

What to watch Wednesday:
  • The Commerce Department releases international trade data for June at 8:30 a.m. Eastern time.
  • The Institute for Supply Management releases its service sector index for July at 10 a.m.
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