U.S. stocks moved lower in midday trading on Wall Street Tuesday as investors headed for more defensive holdings and watched for updates on trade negotiations between the U.S. and China.
Investors are also waiting for a speech by Fed Chairman Jerome Powell Tuesday afternoon for any signal on the direction of interest rates.
Technology and internet stocks led the losses. Microsoft fell 2.2% and Facebook fell 1.4%. FedEx dropped 2.6% and weighed down industrial stocks.
Homebuilders fell sharply after showing early gains. Lennar said on an earnings conference call that tariffs on Chinese goods were adding hundreds of dollars to the cost of its homes. Lennar fell 5.9%.
Banks also declined as bond prices rose and yields fell. Lower bond yields hurt a bank’s ability to charge higher interest on loans. Bank of America fell 1.2%.
The higher bond prices are also a sign that investors remain concerned about a slowdown in economic growth and are favoring seemingly safer holdings.
A 27% surge from Botox maker Allergan held up health care stocks. The company is being bought by drug developer AbbVie.
Consumer product makers were among the stocks making gains in another sign that investors are losing their appetite for risk and heading to safer investments.
KEEPING SCORE: The S&P 500 index fell 0.4% as of noon Eastern time. The Dow Jones Industrial Average fell 54 points, or 0.2%, to 26,671. The Nasdaq composite 0.7%.
WHERE WE STAND: Investors are essentially taking a step back after three weeks of gains while they wait for direction. Presidents Donald Trump and Xi Jinping will meet this week at the Group of 20 meeting of major economies in Japan. The world’s two largest economies spent much of the current quarter escalating their trade war and giving Wall Street jitters over prospects for economic growth.
Wall Street is hoping for the U.S. and China to at least find a path toward an eventual resolution to the trade war.
Meanwhile, the Federal Reserve has been reassuring Wall Street that it is prepared to cut rates to help stabilize the U.S. economy if the trade war crimps growth. Investors have been dealing with a mixed bag of economic data over the last few months. On Tuesday, The Conference Board reported that consumer confidence dropped to its lowest level since September 2017. Meanwhile, home price gains slowed for the 13th straight month and new home sales fell in May.
REVENUE INJECTION: AbbVie fell 15.6% after the drug developer said it will pay around $63 billion for Allergan and add the blockbuster Botox to its products.
Allergan surged 27%.
Botox brought in $868.4 million in revenue for Allergan during the first quarter. AbbVie currently makes the blockbuster immune disorder treatment Humira, but revenue is expected to decline in the coming years as Humira loses patent protection and faces competition.
WRECKING BALL: In another example of investor nervousness over the U.S.-China trade dispute, homebuilder shares tanked after Lennar said tariffs on Chinese goods were adding an average of $500 to each new home.
Lennar shares gained ground early on a solid profit report but fell sharply after the tariff comment on earnings conference call.
Among other homebuilders, PulteGroup fell 3.9% and D.R. Horton fell 4.5%.