US STOCKS-Wall Street edges lower as trade-fueled rally loses steam
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* Defensive sectors lead gains among 11 S&P sectors
* GE jumps after J.P. Morgan upgrade
* P&G rises after BofA Merrill Lynch moves to 'buy'
* Indexes down: Dow 0.09 pct, S&P 0.37 pct, Nasdaq 0.77 pct (Updates to late afternoon, adds commentary, NEW YORK dateline, changes byline)
By Sinéad Carew
NEW YORK, Dec 13 (Reuters) - U.S. stocks edged lower in volatile trading on Thursday, as investors favored defensive sectors while financials and consumer discretionary stocks created the biggest drag.
Wall Street oscillated between positive and negative territory as it struggled to sustain an opening rally spurred by hopes for progress in U.S.-China trade negotiations. A Chinese commerce ministry spokesman had said Washington and Beijing were in close contact over trade.
"Good (trade) news should make the market trade higher. There is just some overhang here," said Mark Esposito, president of Esposito Securities in Dallas, citing worries about earnings and the Federal Reserve.
Trading had been choppy all week with major stock indexes failing to hold their direction for the full session.
"The markets are hanging on every morsel of trade news," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "In the short run because there's not a consistent policy we get the flip-flopping back and forth."
At 2:49PM ET, the Dow Jones Industrial Average fell 22.11 points, or 0.09 percent, to 24,505.16, the S&P 500 lost 9.83 points, or 0.37 percent, to 2,641.24 and the Nasdaq Composite dropped 54.64 points, or 0.77 percent, to 7,043.67.
Investors have also been swiveling on news updates on issues ranging from a potential U.S. government shutdown and interest rates to uncertainty around Brexit and concerns over slowing global growth.
Also fueling investor fears, a Reuters poll showed strategists expect the U.S. Treasury yield curve to invert next year, possibly within the next six months, much earlier than forecast just three months ago, with a recession to follow as soon as a year after that.
The S&P's financial sector was down 0.8 percent as bank stocks fell more than 1 percent.
The defensive utilities, real estate and consumer staples sectors were the only three out the 11 major S&P sectors showing gains.
Retail stocks dropped, with Under Armour sliding 4.8 percent after the sportswear maker forecast 2019 revenue growth and profit below Wall Street estimates. The S&P retail index fell 1 percent, snapping a three-day rally.
Procter & Gamble Co gained 2.5 percent after Bank of America Merrill Lynch upgraded the consumer goods maker's stock to "buy" from "neutral."
General Electric Co was up 7 percent after JP Morgan upgraded the industrial conglomerate's shares to "neutral."
Declining issues outnumbered advancing ones on the NYSE by a 2.03-to-1 ratio. On Nasdaq, a 3.07-to-1 ratio favored decliners.
The S&P 500 posted 10 new 52-week highs and 45 new lows. The Nasdaq Composite recorded 14 new highs and 289 new lows. (Additional reporting by Chuck Mikolajczak in New York, Medha Singh in Bengaluru; Editing by Sriraj Kalluvila and Richard Chang)
