Wall Street slips, investors await fresh cues on trade

(Reuters) – U.S. stocks fell on Wednesday as investors stayed on the sidelines following a strong rally this year, awaiting fresh developments on trade.

The S&P 500 has risen about 11 percent so far this year on optimism that the United States and China will soon end their bitter trade row and the Federal Reserve will be less aggressive in raising interest rates.

Wall Street started the week on a positive note after a report that the two sides would arrive at a trade deal as early as month-end, but the optimism-driven rally has since fizzled out.

The S&P 500 index is struggling to go past the 2,800-point mark, a key resistance level, closing lower in five of the past six sessions in choppy trading.

“It’s been pretty quiet and everything depends on trade and until that shoe drops we’re going to continue to move sideways,” said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

“The longer the markets go without the trade deal, with the optimism so high, it’s going to start putting doubt into the minds of the investors and that’s going to be a risk for a selloff.”

General Electric Co shares tumbled 6.1 percent, extending losses from a day earlier, after it warned of a negative net cash flow from its industrial businesses this year.

The energy sector fell 0.98 percent, the most among 11 major S&P sectors, weighed by oil major Exxon Mobil Corp.

Exxon Mobil’s 1.9 percent drop also weighed on the blue-chip Dow index, after the company said it planned to increase capital spending next year to restore flagging oil and gas production.

At 11:14 a.m. ET, the Dow Jones Industrial Average was down 53.82 points, or 0.21 percent, at 25,752.81, the S&P 500 was down 7.11 points, or 0.25 percent, at 2,782.54 and the Nasdaq Composite was down 30.38 points, or 0.40 percent, at 7,545.98.

Dollar Tree Inc rose 1.7 percent, after the discount store operator reported better-than-expected quarterly same-store sales.

Aon Plc jumped 4.3 percent after the company said it had scrapped plans to pursue a merger with rival insurance brokerage Willis Towers Watson Plc. Willis Towers tumbled 5.4 percent.

The markets seemed to have shrugged off data which showed U.S. trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods.

The Federal Reserve’s Beige Book, a compendium of anecdotes on the health of the economy drawn from the central bank’s sources across the nation, is expected at 2 p.m. ET (1800 GMT).

Declining issues outnumbered advancers for a 1.96-to-1 ratio on the NYSE and for a 2.47-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and five new lows, while the Nasdaq recorded 16 new highs and 20 new lows.