US STOCKS-U.S. stocks back off record highs ahead of Fed meeting

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* Fed policy meeting to start on Tuesday
* U.S.-China trade negotiators meet in Shanghai
* Mylan to combine with Pfizer's Upjohn unit
* Lyft shares drop on news of COO departure
* Dow up 0.11%, S&P 500 off 0.16%, Nasdaq down 0.44%

(Updates to market close)
By Stephen Culp
NEW YORK, July 29 (Reuters) - U.S. stocks on Monday stepped
back from last week's record highs as investors took a breather
ahead of an expected interest rate cut by the Federal Reserve
and looked for signs of progress from U.S.-China trade
negotiations underway in Shanghai.
Amazon.com Inc AMZN.O and Facebook Inc FB.O weighed
heaviest on the S&P 500 and the Nasdaq, which both closed lower.
The blue-chip Dow closed in the black, led by 3M Co MMM.N ,
Johnson & Johnson JNJ.N and Apple Inc AAPL.O .
Market participants girded themselves for an eventful week,
with the FOMC meeting, U.S.-China trade talks and nearly a third
of the companies in the S&P 500 due to post second-quarter
results.
The Fed, watchful of languid inflation and signs of economic
softness arising from tariff disputes, is expected to lower
interest rates for the first time in a decade at the conclusion
of its two-day monetary policy meeting starting on Tuesday.
"(The Fed is) looking ahead and they know there's increased
downside risks around trade and supply lines," said Charlie
Ripley, Senior Investment strategist for Allianz Investment
Management in Minneapolis. "What they want to do is sustain the
economic expansion, and one way to do that is an insurance rate
cut in the event the economy slows down more than expected."
U.S. negotiators are meeting their Chinese counterparts in
Shanghai this week to try to find a path toward resolving the
long-running, market-rattling trade dispute between the world's
two largest economies. Trade uncertainty has "provided a back drop that's made it
difficult for business managers," said Ripley, adding that the
talks are "better than complete silence."
The Dow Jones Industrial Average .DJI rose 28.9 points, or
0.11%, to 27,221.35, the S&P 500 .SPX lost 4.89 points, or
0.16%, to 3,020.97 and the Nasdaq Composite .IXIC dropped
36.88 points, or 0.44%, to 8,293.33.
Seven of the 11 major sectors in the S&P 500 closed in the
red, with financials .SPSY and consumer discretionary
.SPLRCD seeing largest percentage losses.
Nearly half of all S&P 500 companies have now posted
second-quarter earnings, 76.1% of which have beaten bottom line
analyst estimates, according to Refinitiv data.
Mylan NV's MYL.O shares jumped 12.6% after the generic
drugmaker confirmed reports that it was combining with Pfizer
Inc's PFE.N Upjohn unit that sells its off-patent branded
medicines, a move that brings blockbuster treatments Viagra,
EpiPen and Lipitor under one umbrella. Pfizer shares slid 3.8% following news of the deal, and
after the company lowered its full-year profit and revenue
forecasts in an earlier-than-expected release of its quarterly
results. Ride-hailing company Lyft Inc LYFT.O closed 2.3% lower
following a CNBC report that Chief Operating Officer Jon McNeill
is leaving. Lyft rival Uber Technologies Inc UBER.N also lost ground,
dropping 1.4% after news that the company was laying off about
one-fifth of its sales and marketing team, globally.
Starbucks Corp SBUX.O fell below Friday's record high,
dropping 1.1% after J.P. Morgan downgraded the coffee chain's
stock to "neutral," saying its valuation has become "beyond
stretched." Advancing issues outnumbered declining ones on the NYSE by a
1.02-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored decliners.
The S&P 500 posted 36 new 52-week highs and 3 new lows; the
Nasdaq Composite recorded 71 new highs and 106 new lows.
Volume on U.S. exchanges was 5.98 billion shares, compared
to the 6.1 billion average over the last 20 trading days.