* Investors await Fed chair's speech on Friday
* Facebook, Netflix shares slide
* Home Depot , Medtronic (NYSE:MDT) rise after quarterly reports
* Indexes down: Dow 0.66%, S&P 0.79%, Nasdaq 0.68%
(Updates to market close)
By April Joyner
NEW YORK, Aug 20 (Reuters) - Financial shares led U.S.
stocks lower on Tuesday to end a three-day rally as investors
awaited comments from Federal Reserve Chair Jerome Powell at the
end of the week.
The S&P 500 financial index .SPSY dropped 1.4% and the
group weighed most heavily on the benchmark index among its
major sectors, which all registered losses.
Prior to Tuesday's session, U.S. stocks had recovered most
of their losses from a steep sell-off last Wednesday, which was
triggered by a brief inversion of the yield curve between 2-year
and 10-year Treasuries, widely considered a harbinger of a
recession. Reports of stimulus efforts in China and Germany,
along with the subsequent steepening of the yield curve, helped
assuage recession fears.
The S&P 500 is now 4.1% shy of its record closing high in
July after having fallen as much as 6.2% below that level.
Investors said they were looking forward to Friday's speech
from the Fed's Powell at the Jackson Hole central bankers'
conference for more clues on the course of monetary policy and
interest rates. Hints on the U.S. central bank's plans may also
be found in minutes from the Fed's July policy meeting, which
will be released on Wednesday.
"Everyone is waiting for Jackson Hole," said Jim Awad,
senior managing director at Clearstead Advisors in New York.
"It's a wait-and-see attitude until Friday."
The Fed's moves have drawn close attention as U.S. economic
growth has moderated and the U.S.-China trade dispute has
weighed on business confidence. On Tuesday, President Donald
Trump said his administration was looking at cuts to payroll and
capital gains taxes. Some investors said that such efforts, along with Trump's
calls for the Fed to lower rates, could signal wavering
confidence in the U.S. economy.
"It adds to the perception that there is concern," said
Quincy Krosby, chief market strategist at Prudential Financial (NYSE:PRU)
in Newark, New Jersey.
The Dow Jones Industrial Average .DJI fell 173.35 points,
or 0.66%, to 25,962.44, the S&P 500 .SPX lost 23.14 points, or
0.79%, to 2,900.51 and the Nasdaq Composite .IXIC dropped
54.25 points, or 0.68%, to 7,948.56.
Shares of Netflix Inc NFLX.O fell 3.4% after Walt Disney (NYSE:DIS)
Co DIS.N announced its streaming service would launch in
Canada and the Netherlands in November. Facebook Inc FB.O shares dropped 1.3% as the company said
it was tweaking its policies to allow users to see and control
the data that other websites and apps share with the social
network to improve targeted advertising. A Bloomberg report that
Facebook's Libra digital currency faces an anti-trust probe by
the European Union also weighed on the shares. Home Depot Inc (NYSE:HD) HD.N shares climbed 4.4% to lead in
percentage gains on the S&P 500 after the home improvement
retailer's quarterly earnings beat estimates. Shares of rival
Lowe's Companies Inc LOW.N also rose, up 3.0%. Medtronic Plc MDT.N shares rose 2.6%, also among the
biggest percentage gains on the S&P 500, after the medical
device maker raised its full-year adjusted profit forecast.
Declining issues outnumbered advancing ones on the NYSE by a
1.49-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and five new lows;
the Nasdaq Composite recorded 45 new highs and 80 new lows.
Volume on U.S. exchanges was 5.75 billion shares, compared
with the 7.56 billion average for the full session over the last
20 trading days.