Health care companies helped pull the broader stock market slightly lower Monday in a day of listless trading on Wall Street as investors focused on upcoming trade talks between the U.S. and China.
The major stock indexes drifted between small gains and losses for much of the day, though smaller company stocks fell sharply relative to the rest of the market. The modest decline erased some of the market's solid gains from last week.
Investors were looking ahead to a highly anticipated meeting between the U.S. and China's leaders later this week. The world's two largest economies have been embroiled in a trade war that has taken the market on a volatile roller-coaster ride this year and Wall Street is hoping for a deal.
"The market right now seems to be pricing in some combination of at least a de-escalation between the U.S. and China from a trade standpoint to the point where it doesn't drive us into a recession," said Michael Crook, head of Americas investment strategy at UBS Global Wealth Management.
Health care stocks accounted for a big share of the selling as pharmaceutical giant Bristol-Myers Squibb and its buyout target Celgene stumbled. Consumer discretionary stocks and banks also helped pull the market lower. Ulta Beauty dropped 3% and Capital One Financial slid 3.3%.
Energy stocks declined. The sector remains volatile as oil prices fluctuate over concerns about economic growth and rising tensions in the Middle East. Concho Resources fell 3.7%.
Technology companies, consumer goods makers and materials stocks were among the gainers. Western Digital gained 2.6%, Tyson Foods added 2.4% and Newmont Goldcorp rose 2.2%.
Bond prices rose, sending yields lower, as investors continued to shift money into U.S. bonds as a hedge against a possible downturn in the economy or further escalation in trade tensions. The yield on the 10-year Treasury note fell to 2.02% from 2.06% late Friday.
"The pricing in the bond market right now does indicate that it wouldn't take much to create a recession if we had some bad policy mistake either from the Fed or from a trade standpoint," Crook said.
The market notched its third straight weekly gain last week and is on track for a strong monthly rebound from a steep sell-off in May. The major U.S. stock indexes are up more than 7% so far this month and are holding on to gains of more than 14% for the year.
Investors have been reassured by statements from the Federal Reserve this month that suggest the central bank is prepared to cut interest rates in response to a slowing global economy. Even so, traders remain concerned that corporate profits might suffer should the kind of economic slowdown that would prompt the Fed to cut rates take hold.
KEEPING SCORE: The S&P 500 index was down 0.1% as of 3:41 p.m. Eastern time. The Dow Jones Industrial Average rose 32 points, or 0.1%, to 26,751. The Nasdaq composite dropped 0.2%. The Russell 2000 index of smaller companies slid 1.1%.
Major indexes in Europe finished mostly lower.
FOCUSING ON TRADE: Presidents Donald Trump and Xi Jinping plan to meet at the Group of 20 summit in Japan, which starts Friday. Wall Street is once again hoping that the two sides can find a path to making a deal that will end their trade war.
Uncertainty over the dispute and its potential impact on global economic growth sent the broader market on a bumpy ride during the second quarter as the tensions escalated. The S&P 500 reached a record high last week and has recovered all its losses from May.
The two sides are in a stalemate after 11 rounds of talks that have failed to overcome U.S. concerns over China's acquisition of American technology and its massive trade surplus. China denies forcing U.S. companies to hand over trade secrets and says the surplus is much smaller than it appears.
COSTLY TREATMENT: Pharmaceutical company Bristol-Myers Squibb fell 7.4% after it said it would divest a blockbuster drug in order to complete its buyout of Celgene. Celgene dropped 5.4%.
The company is trying to gain Federal Trade Commission approval for its $74 billion buyout of Celgene as it tries to beef up its portfolio of drugs. Bristol-Myers said it is willing to divest the psoriasis treatment Otezla as part of a push toward regulatory approval.
HIGH ROLLER: Caesars surged 14.3% after Eldorado Resorts said it will buy the casino operator for $17.3 billion in a cash-and-stock deal.
The deal creates a casino giant with about 60 casinos and resorts in 16 states under a single name. Caesars has been struggling since emerging from bankruptcy in 2017. Billionaire investor Carl Icahn took an enormous stake in the company and pushed for big changes. Eldorado fell 10%.
AP Business Writer Damian J. Troise contributed to this report.