US STOCKS-Wall St drops as Apple falls, Fed eyed

* Apple falls on downgrade, weighs on tech
* Boeing slips as Saudi airline dumps MAX order
* Indexes down: Dow 0.4%, S&P 0.5%, Nasdaq 0.8%

(Updates to close)
By Caroline Valetkevitch
NEW YORK, July 8 (Reuters) - U.S. stocks fell on Monday as
Apple shares dropped following a broker downgrade and investors
continued to weigh chances of an aggressive interest rate cut by
the Federal Reserve later this month.
Apple Inc AAPL.O fell 2.2% and was the biggest drag on the
S&P 500 and Nasdaq. Rosenblatt Securities downgraded the iPhone
maker's shares to "sell" from "neutral," and said it expected
the company to face "fundamental deterioration" in the next six
to 12 months.
The technology .SPLRCT index was down 0.7%, while the
healthcare index .SPXHC fell 0.8%, weighed down by U.S.
President Donald Trump's recent statement about an upcoming
executive order that would lower prescription drug prices.
Surprisingly strong U.S. jobs data on Friday has forced
traders to temper hopes of a sharp rate cut at the central
bank's July 30-31 policy meeting, even as a reduction is still
expected.
"People are facing further confusion over the number of
interest rate decreases we're likely to have going forward due
mainly to the strong job numbers Friday, and reacting with a
mildly down day in the market," said Peter Tuz, president of
Chase Investment Counsel in Charlottesville, Virginia.
"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.
A week ago, the market forecast an 80.1% chance of a
25-basis-point cut, and a 19.9% chance of a 50-basis-point cut,
according to CME Group's FedWatch tool. In afternoon trade, the
chances were 92% and 8%, respectively.
Investors might get an opportunity to gauge near-term
monetary policy thinking during Fed Chairman Jerome Powell's
semi-annual testimony to the U.S. Congress on July 10-11. Also
ahead are the central bank's June meeting minutes, scheduled for
release on Wednesday.
Market watchers are also likely to focus on the start of the
second-quarter earnings season next week. Profits for S&P 500
companies are expected to have dipped 0.1% from a year ago,
according to Refinitiv IBES data.
"People are trying to game how bad second-quarter earnings
and guidance are going to be," Tuz said. "People are expecting a
weak second quarter, but it's hard to determine how weak and
what kind of guidance about third and fourth quarters will go
along with that."
Boeing Co BA.N fell 1.3% and was the biggest drag on the
Dow 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. Symantec Corp SYMC.O rose 2.4% after Jefferies said the
cybersecurity firm is a "logical financial acquisition" amid
reports Broadcom Inc AVGO.O is in advanced talks for a deal.
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.
The S&P 500 posted 20 new 52-week highs and no new lows; the
Nasdaq Composite recorded 42 new highs and 50 new lows.
Volume on U.S. exchanges was 5.74 billion shares, compared
to the 6.77 billion average for the full session over the last
20 trading days.