Major U.S. stock indexes moved mostly lower in afternoon trading Tuesday, nudging the broader market toward a three-day losing streak.
Stocks were following a run of record highs last week with losses as investors weighed the odds that the Federal Reserve will cut interest rates at the end of the month.
The market rallied through much of June after the central bank 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 at its next meeting of policymakers.
Many traders 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 2.6%, Constellation Brands dropped 2.5% and Mosaic fell 3.2%.
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%.
Homebuilders fell as bond prices fell, lifting the yield on the 10-year Treasury note to 2.06% from 2.03% late Monday. When bond yields rise, they drive up interest rates on mortgages and other loans, making borrowing more expensive. Hovnanian Enterprises dropped 2.8%.
KEEPING SCORE: The S&P 500 was down 0.1% as of 1:31 p.m. Eastern time. The Dow Jones Industrial Average slid 75 points, or 0.3%, to 26,730. The Nasdaq composite, which his heavily weighted with technology companies, rose 0.3%, while the Russell 2000 index of smaller company stocks dropped 0.3%.
Major stock indexes in Europe finished 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 35.2% after the company agreed to be acquired by Cisco Systems.
APPETIZING DEALS: TreeHouse Foods rose 1.6% after the company said it has reached a deal to sell its snack division to Atlas Holdings for $90 million.
MIXED REPORT: Shares in PepsiCo fell 1.1% after the beverage maker said it has had to raise prices as customers move to smaller serving sizes. That overshadowed the company's latest quarterly results, which beat profit and revenue expectations.