US STOCKS-Wall Street slips as trade optimism fades

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* USTR threatens $4 bln in additional tariffs on EU goods
* Gilead rises on plans for new drug filing
* Energy falls the most among S&P sectors
* Indexes down: Dow 0.16%, S&P 0.04%, Nasdaq 0.08%

(Updates to open)
By Shreyashi Sanyal and Amy Caren Daniel
July 2 (Reuters) - U.S. stocks edged lower on Tuesday, a day
after a record-setting rally, as optimism sparked by the
U.S.-China trade truce waned after Washington threatened tariffs
on $4 billion of additional EU goods.
Just as trade tensions with China seemed to be easing, the
U.S. government ratcheted up pressure on Europe by threatening
to slap tariffs amid a long-running dispute over aircraft
subsidies.
"While the threat of additional tariffs on EU imports is
still an overhang for investors, the market is more likely
taking a breather until new macro-economic data comes out,"
Peter Cardillo, chief market economist at Spartan Capital
Securities said.
The energy sector .SPNY slipped 1.18% and was the biggest
drag on markets as crude prices fell on demand worries. Oil
majors Exxon Mobil Corp XOM.N and Chevron Corp CVX.N
declined about 1% each. O/R
The S&P 500 index .SPX hit a record high on Monday after
Washington and Beijing agreed over the weekend to resume trade
talks after negotiations broke down in May. The breakdown triggered the worst monthly performance this
year, but markets have since recouped most of the losses on
hopes that the Federal Reserve would be more accommodative to
counter a slowing global economy.
Market participants still expect the Fed to cut interest
rates at its July 30-31 policy meeting, despite the latest
developments in trade talks.
The Dow Jones Industrial Average .DJI fell 42.03 points,
or 0.16%, to 26,675.4, and the S&P 500 .SPX lost 1.08 points,
or 0.04%, to 2,963.25. The Nasdaq Composite .IXIC dropped 6.16
points, or 0.08%, to 8,085.00.
Investors will be watching out for the monthly jobs report
on Friday, which is expected to show that the private sector
added 160,000 jobs in June, after a sharp slowdown in jobs
growth in May.
The report will follow a batch of discouraging manufacturing
data in the past 24 hours from around the world that has
rekindled growth fears.
Among stocks, Automatic Data Processing ADP.O slipped
4.2%, the most among S&P 500 companies, after market sources
said brokerage Jefferies is re-offering 8 million of the
company's shares at a discount. Coty Inc COTY.N dropped for the second straight day, down
2.4% as multiple brokerages cut price targets on the cosmetics
maker's shares. Gilead Sciences Inc GILD.O rose 1.30% after the drugmaker
said it will submit a new drug application for its arthritis
drug to the U.S. FDA this year.
Declining issues outnumbered advancers for a 1.08-to-1 ratio
on the NYSE and for a 1.35-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and no new low,
while the Nasdaq recorded 32 new highs and 17 new lows.