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* Fed's rate-setting meeting under way
* Trump fires new warning at China
* Merck, P&G rise on quarterly profit beats
* Under Armour slides on N.America rev forecast cut
* Indexes off: Dow 0.25%, S&P 500 0.34%, Nasdaq 0.47%
(Updates to open)
By Shreyashi Sanyal
July 30 (Reuters) - U.S. stocks dropped on Tuesday as
U.S.-China trade worries pressured technology shares, while the
scale of consensus at the Federal Reserve in favor of deeper
cuts in interest rates ate into optimism that drove markets to
record highs last week.
The S&P 500 technology sector .SPLRCT fell 0.62%, with
Apple Inc's AAPL.O 0.84% drop weighing the most on the index.
The iPhone maker's report after hours will provide a clear
gauge on the impact of trade tensions with China, coming on the
heels of renewed trade talks and as President Donald Trump
warned Beijing against trying to wait out his first term in
office to finalize a trade deal. Wall Street's main indexes have had a slow start to the
week, retreating on Monday, and participants are bracing for
what message the Fed will send if it pushes ahead with a
well-telegraphed move to ease policy that has driven stocks
higher since May.
With a quarter-percentage-point cut in rates fully
priced-in, investors will watch for how Fed Chairman Jerome
Powell manages debate about whether the stimulus is necessary
and what that says about the attitude of the U.S. central bank
to doing more in the months ahead. "I think the Fed is going to leave the door open for further
rate cuts even if they don't do 50 bps cut right now," said
Scott Brown, chief economist at Raymond James in St. Petersburg,
Florida.
Brown said concerns about trade policy and forward earnings
growth are on the forefront.
Corporate earnings so far have been robust with nearly half
of all S&P 500 companies reporting second-quarter results. More
than 76% have beaten bottom line estimates, according to
Refinitiv data.
Backing the case further for a reduction in borrowing costs
was data from the Commerce Department that showed U.S. consumer
spending and prices rose moderately in June, pointing to slower
economic growth and benign inflation. Bank stocks .SPXBK , which tend to benefit from a rising
interest rate environment, dropped 0.6%.
The Dow Jones Industrial Average .DJI fell 67.39 points,
or 0.25%, to 27,153.96, the S&P 500 .SPX lost 10.28 points, or
0.34%, to 3,010.69. The Nasdaq Composite .IXIC dropped 39.24
points, or 0.47%, to 8,254.09.
A 4.66% tumble in shares of Pfizer Inc PFE.N a day after
the drugmaker said it would spinoff its off-patent drugs unit
with Mylan MYL.O , weighed the most on the healthcare index
.SPXHC .
Merck & Co Inc MRK.N rose 2.24% after the drugmaker
reported quarterly profit above expectations. Procter & Gamble Co PG.N jumped 4.41% after the consumer
goods maker beat estimates for quarterly revenue, boosted by
price hikes and strong demand for its beauty products.
Under Armour Inc UAA.N tumbled 15% after the sportswear
maker cut its full-year revenue forecast for North America, its
biggest market. Declining issues outnumbered advancers for a 1.97-to-1 ratio
on the NYSE and for a 1.99-to-1 ratio on the Nasdaq.
The S&P index recorded 18 new 52-week highs and one new low,
while the Nasdaq recorded 21 new highs and 57 new lows.