US stocks have edged down as quarterly results from banks added to concerns about lower interest rates dampening their profits, while comments from President Donald Trump on trade also dragged down Wall Street’s major indexes.
JPMorgan Chase and Wells Fargo beat quarterly profit estimates but reported weaker net interest income, pointing to rising deposit costs.
Those results followed Citigroup’s on Monday, in which the bank reported a drop in its net interest margin.
JPMorgan shares erased early losses to end 1.1 per cent higher on Tuesday.
Wells Fargo shares, however, slipped 3 per cent as the bank tempered its outlook for cutting costs.
Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, said the yield curve was tipped to stay flat.
“The expectation is the yield curve is going to remain flat, so you’re going to still continue to see net interest margins compress, and that’s going to hurt profitability,” he said.
“There’s not a lot of expected upside to Q3 and Q4.”
Stocks also moved lower after Trump said there was a long way to go with China on trade and threatened to put tariffs on another $US325 billion of Chinese goods.
The major indexes briefly pared losses after Federal Reserve Chair Jerome Powell reiterated that the central bank would “act as appropriate” to keep the US economy humming, but they later moved back to their previous levels.
Michael Antonelli, market strategist at Robert W Baird in Milwaukee, said although Trump’s comments were not new they could still weigh on investors.
“In a really quiet market, a headline like this has a magnified effect, so even if it’s not something investors don’t already know, it can move the market with ease,” he said.
Shares of Goldman Sachs Group, which also announced results, rose 1.9 per cent.
Goldman Sachs is considered the least rate-sensitive of the three major banks that gave quarterly reports on Tuesday.
The Dow Jones Industrial Average fell 23.53 points, or 0.09 per cent, to 27,335.63, the S&P 500 lost 10.26 points, or 0.34 per cent, to 3004.04 and the Nasdaq Composite dropped 35.39 points, or 0.43 per cent, to 8222.80.
Johnson & Johnson shares slipped 1.6 per cent after the diversified healthcare company warned that competition from generic and copycat drugs could impact its third-quarter results.
Johnson & Johnson was the second-biggest drag on the S&P 500.
Shares of JB Hunt Transport Services jumped 5.6 per cent, the greatest percentage gain among S&P 500 stocks, after the trucking company posted strong quarterly performance in its second-largest unit DCS, which provides final-mile delivery.
The rise in JB Hunt shares helped lift the Dow Jones Transportation Average 1.8 per cent and aided a 0.7 per cent rise in industrials.
In economic news, a better-than-expected June retail sales report pointed to strong consumer spending.
The data did not change the expectations of a rate cut this month, though it lowered hopes of an aggressive cut.
Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favoured decliners.
The S&P 500 posted 58 new 52-week highs and one new low; the Nasdaq Composite recorded 76 new highs and 70 new lows.
Volume on US exchanges was 6.18 billion shares, compared to the 6.71 billion average for the full session over the last 20 trading days.