Wall Street rally loses steam as industrials drag
(Reuters) – Wall Street’s main indexes gave up gains to trade slightly lower on Tuesday, as declines in industrial companies dampened early optimism over easing trade tensions and the prospect of an interest rate cut by the Federal Reserve.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 3, 2019. REUTERS/Brendan McDermid
The industrial sector fell 1.09%, weighed down by losses in United Technologies Corp and Raytheon Co.
United Technologies fell 4.1% and Raytheon 4.9%, a day after U.S. President Donald Trump gave mixed signals on whether he believed the $121 billion merger between the companies should go forward.
Optimism over Trump’s decision late on Friday to hold off import tariffs on Mexico has helped markets rally this week, even though the United States warned it would impose tariffs if its demands were not satisfied.
Separately, Trump said he would impose more tariffs on Chinese imports if there was no progress in talks with Chinese President Xi Jinping at the G20 summit.
“The unresolved trade dispute with China is still a ceiling on the stock market,” said Greg McBride, senior vice president and chief financial analyst at Bankrate in Palm Beach, Florida.
“Don’t expect the S&P 500 to get back to the record high until the trade agreement is signed or close to being signed.”
The benchmark index is now just about 2.4% away from its early May all-time high.
Meanwhile, the market is betting on an interest rate cut in July and two more this year as Trump’s hard bargaining on trade with Beijing and others could push the economy back into recession.
However, U.S. producer prices increased solidly for a second straight month in May, in line with expectations of economists polled by Reuters, pointing to a steady pickup in underlying inflation pressures.
At 12:45 p.m. EDT, the Dow Jones Industrial Average was down 13.89 points, or 0.05%, at 26,048.79, the S&P 500 was down 2.55 points, or 0.09%, at 2,884.18 and the Nasdaq Composite was down 8.08 points, or 0.10%, at 7,815.09.
A decline in technology stocks, including Microsoft Corp, Mastercard Inc and Adobe Inc, also added pressure to the indexes.
Symantec Corp fell 2.8%, after Morgan Stanley downgraded the antivirus software maker’s stock, citing increased competition.
Declining issues outnumbered advancers for a 1.05-to-1 ratio on the NYSE and for a 1.33-to-1 ratio on the Nasdaq.
The S&P index recorded 49 new 52-week highs and three new lows, while the Nasdaq recorded 51 new highs and 73 new lows.
Reporting By Aparajita Saxena and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur