Major U.S. stock indexes were mixed in morning trading Tuesday, leaving the broader market little changed after a two-day losing streak.
Wall Street got off to a weak start for the third straight day as it continued to pull back following a run of record highs last week. Investors have turned cautious as they look for signs of how far the Federal Reserve might cut interest rates after upbeat economic data in recent days.
The market rallied through much of June after the Fed signaled that it's prepared to cut interest rates to offset slowing global growth and the fallout from U.S. trade conflicts. But an unexpectedly strong U.S. jobs report Friday has dimmed investors' expectations that the Fed will cut its benchmark interest rate by as much as half a percentage point later this month.
Many investors still expect a cut of a quarter percentage point, but fewer are now expecting a half-point reduction.
Investors will be listening closely for any hints on the central bank's interest rate policy on Wednesday and Thursday, when Fed Chair Jerome Powell delivers the Fed's semi-annual monetary report to Congress.
Industrials, consumer staples and materials stocks declined. 3M slid 2.5%, Constellation Brands dropped 2.1% and Mosaic fell 3.5%.
The losses in those sectors were partially offset by gains in communications services and technology stocks. Netflix rose 1.9% and chipmaker Advanced Micro Devices climbed 2.7%.
Banks also rose as bond prices fell, lifting the yield on the 10-year Treasury note to 2.05% from 2.03% late Monday. When bond yields rise, they drive interest rates higher, making mortgages and other loans more profitable for banks. SunTrust Banks gained 1.3%.
KEEPING SCORE: The S&P 500 was down less than 0.1% as of 11:26 a.m. Eastern time. The Dow Jones Industrial Average slid 81 points, or 0.3%, to 26,724. The Nasdaq composite, which his heavily weighted with technology companies, rose 0.3%, while the Russell 2000 index of smaller company stocks dropped 0.4%.
Major stock indexes in Europe headed lower.
EYE ON THE FED: The Fed's benchmark interest rate currently stands in a range of 2.25% to 2.5% and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.
On Friday, the Fed emphasized that it would act as necessary to sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates. The Fed's statement came in its semiannual report on monetary policy.
TECH BUYOUT: Acacia Communications jumped 35% after the company agreed to be acquired by Cisco Systems.
APPETIZING DEAL: TreeHouse Foods rose 1.4% after the company said it has reached a deal to sell its snack division to Atlas Holdings for $90 million.
BOND YIELD FALLOUT: Rising bond yields weighed on homebuilder stocks. The pickup in bond yields pushes up interest rates on mortgages, making home loans more expensive for would-be homebuyers. Hovnanian Enterprises dropped 3.8%.