Investing.com – The Dow fell Tuesday as gains in consumer discretionary stocks and expectations for the Federal Reserve to continue its pledge to keep rate hikes on hold were offset by reports of souring U.S.-China trade talks.
The Dow Jones Industrial Average fell 0.10%, the S&P 500 lost 0.01%, while the Nasdaq Composite rose 0.12%. The Dow had been up about 196 points before the rally abruptly stalled.
Signs of mistrust between the U.S. and China poured cold water on expectations that a trade deal would be wrapped up sooner rather than later, prompting selling across trade-sensitive sectors such as industrials and materials.
Some U.S. officials fear that China is failing to honor certain trade concessions, Bloomberg reported Tuesday afternoon, citing people familiar with the negotiations. In addition, sources told Bloomberg China wants to cut the troubled Boeing 737 Max from the list of U.S. exports it would buy. Boeing (NYSE:BA) saw a rally trimmed to a small gain in regular trading and was off slightly after hours
The Bloomberg report arrived as a summit to conclude a U.S.-China trade deal was postponed from this month to April, with Beijing reportedly taking issue with Washington's demand for a unilateral enforcement framework.
Washington has argued that an enforcement framework is needed to ensure Beijing complies with eventual terms of a trade deal, or risk penalties for stepping out of line.
Beyond trade, consumer discretionary and health care delivered gains for the broader market led by L Brands (NYSE:LB) and Cigna (NYSE:CI).
Investor expectations for the Federal Reverse to deliver a dovish outlook on monetary policy on Wednesday also limited downside in the broader averages.
The central bank’s pledge to keep monetary policy tightening on hold has been a key driver for the rebound in stocks this year after the sharp slump at the end of last year.
Tech also proved a bright spot, albeit with modest gains on offer, thanks strong gains from chip stocks led by AMD.
Advanced Micro Devices rallied 11.8% as Morgan Stanley delivered an upbeat assessment of the chipmaker after it won as part of Google (NASDAQ:GOOGL)'s upcoming cloud-gaming offering.
"We continue to be impressed by AMD’s progress at using innovative approaches to expand its markets in all segments," analyst Joseph Moore added.
Among other chipmakers, NVIDIA (NASDAQ:NVDA) rose 4% and Micron Technology Inc (NASDAQ:MU) added 1.9%. Micron Technology (NASDAQ:MU) will report earnings on Wednesday after the market closes.
In other company news, Google unveiled a new streaming game service amid a push into the $140-billion gaming industry. The tech giant will compete with with Sony, Microsoft (NASDAQ:MSFT) and possibly Amazon.com (NASDAQ:AMZN), which is reportedly working on a similar service.
On the economic front, U.S. factory orders showed little change from the previous month, growing just 0.1% in January, missing economists' expectations for a 0.3% increase.
Top S&P 500 Gainers and Losers Today:
Advanced Micro Devices (NASDAQ:AMD), NVIDIA (NASDAQ:NVDA) and DaVita HealthCare (NYSE:DVA) were among the top S&P 500 gainers for the session.
Twenty-First Century Fox A (NASDAQ:FOXA), Monster Beverage (NASDAQ:MNST) and JB Hunt Transport Services (NASDAQ:JBHT) were among the worst S&P 500 performers of the session.