NEW YORK - Wall Street eased on
Wednesday, with bank stocks declining as prospects of a U.S.
interest rate cut rose and energy shares tumbling along with oil
prices.
The S&P 500 energy index slid 1.4%, the most among
the 11 S&P sectors, as crude prices fell 4% to settle at $51.14
a barrel. The day's losses made energy the worst-performing S&P
500 sector for the year-to-date.
A report from the Labor Department showed U.S. consumer
prices rose 0.1% in May, in line with expectations of economists
polled by Reuters, pointing to moderate inflation.
The muted reading on inflation backed the case for a rate cut by
the Federal Reserve.
Banking stocks, which tend to benefit from a higher
interest rate environment, dropped 1.2%. The broader financial
sector fell 0.8%.
Even so, hopes that the Fed will act to counter a slowing
global economy due to the escalating trade war with China have
spurred a rally in stocks this month. The S&P 500 index
is up 4.6% so far in June.
Fed policymakers will meet on June 18-19. Markets have
priced in at least two rate cuts by the end of 2019. Fed fund
futures imply around an 80% chance of an easing in
rates as soon as July.
Investors are reducing exposure to stocks after the recent
rally and as they brace for the Fed meeting.
"People don't want to be too far over their skis going into
next week," said Michael James, managing director of equity
trading at Wedbush Securities in Los Angeles.
The Dow Jones Industrial Average fell 45.67 points,
or 0.18%, to 26,002.84, the S&P 500 lost 5.68 points, or
0.20%, to 2,880.04 and the Nasdaq Composite dropped
29.73 points, or 0.38%, to 7,792.83.
Lingering worries on the trade front weighed on sentiment, a
day after President Donald Trump said he was holding up a deal
with China and had no interest in moving ahead unless Beijing
agrees to four or five major points.
With less than three weeks before proposed talks between the
United States and Chinese leaders, sources say there has been
little preparation for a meeting even though the health of the
world economy is at stake.
Trump also said a potential trade deal could be reached with
China, but again threatened to increase tariffs on Chinese goods
if the world's two largest economies do not make a deal.
Semiconductor stocks, which get a sizeable portion of
revenue from China, declined on Wednesday. The Philadelphia
Semiconductor index dropped 2.3%. Micron Technology Inc
, Applied Materials Inc and Lam Research Corp
fell.
Facebook Inc shares declined 2% after the Wall Street
Journal reported that the social media giant uncovered emails
that appear to show Chief Executive Officer Mark Zuckerberg's
connection to potentially problematic privacy practices at the
company.
Declining issues outnumbered advancing ones on the NYSE by a
1.14-to-1 ratio
The S&P 500 posted 23 new 52-week highs and two new lows;
the Nasdaq Composite recorded 37 new highs and 95 new lows.