Bellwether exporting and metal-using stocks such as Caterpillar and Boeing fell victim to the trade tariff controversy, weakening the Dow industrials. Crude oil prices and gold also fell.
The declines came as investors continue to assess the Trump administration’s plan to impose tariffs on steel and aluminium imports.
At the close of trading in New York, the Dow Jones Industrial Average shed 157.13 points, or 0.6%, to 25,178.61, turning lower after rising as much as 113 points earlier in the session.
The S&P 500 eased 0.1% to 2783.02. The Nasdaq Composite climbed 0.4% to 7588.32, a closing high for the second consecutive session.
“This equity market is in a muddle-along zone,” says Terry Sandven, chief equity strategist at US Bank Wealth Management, adding that he expects US stocks to continue to rise, though at a more muted pace than in 2017.
Industrial stocks were the biggest decliners in the S&P 500, down 1%, as Boeing dropped 2.9%, Caterpillar 2.4% and Pratt & Whitney parent United Technologies 1.9%.
Fixed interest challenges stocks
Investors will be monitoring consumer-price index data from the Labor Department on Tuesday for more clues on price pressures.
Inflation chips away at the purchasing power of government bonds, leading to declines in Treasury prices. This, in turn, could make government bonds more attractive relative to stocks, while inflation rising at a faster rate could also lead the Federal Reserve to accelerate its pace of raising rates.
“Fixed income is becoming more competitive now for equities,” Mr Sandven says.
The yield on the 10-year US Treasury note hovers at 2.890% compared with 2.894% on Friday.
“Both core inflation and wages remain subdued for the moment,” says Eric Robertsen, global head of foreign exchange, rates and credit research at Standard Chartered.
“But clients expect the combination of fiscal stimulus and [US dollar] weakness to ultimately lead to price pressures” – forcing the Fed to raise rates faster than had been anticipated.
US crude oil fell 1.1% to $US61.36 a barrel and gold declined 0.2% to $US1319.40 an ounce.
The Stoxx Europe 600 edged up 0.3% amid a flurry of merger news. France’s CAC 40 rose 0.04%, and Germany’s DAX increased 0.6% while the UK’s FTSE 100 eased 0.1%.
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