US STOCKS-Wall Street slips as trade optimism fades

GLOBAL MARKETS-Relief rally fades fears of expanding trade wars
July 2, 2019
US STOCKS-S&P 500 set to open at record high on rising rate cut hopes
July 4, 2019

US STOCKS-Wall Street slips as trade optimism fades

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* USTR threatens $4 bln in additional tariffs on EU goods

* Gilead rises on plans for new drug filing

* Energy falls the most among S&P sectors

* Indexes down: Dow 0.16%, S&P 0.04%, Nasdaq 0.08% (Updates to open)

By Shreyashi Sanyal and Amy Caren Daniel

July 2 (Reuters) – U.S. stocks edged lower on Tuesday, a day after a record-setting rally, as optimism sparked by the U.S.-China trade truce waned after Washington threatened tariffs on $4 billion of additional EU goods.

Just as trade tensions with China seemed to be easing, the U.S. government ratcheted up pressure on Europe by threatening to slap tariffs amid a long-running dispute over aircraft subsidies.

“While the threat of additional tariffs on EU imports is still an overhang for investors, the market is more likely taking a breather until new macro-economic data comes out,” Peter Cardillo, chief market economist at Spartan Capital Securities said.

The energy sector slipped 1.18% and was the biggest drag on markets as crude prices fell on demand worries. Oil majors Exxon Mobil Corp and Chevron Corp declined about 1% each.

The S&P 500 index hit a record high on Monday after Washington and Beijing agreed over the weekend to resume trade talks after negotiations broke down in May.

The breakdown triggered the worst monthly performance this year, but markets have since recouped most of the losses on hopes that the Federal Reserve would be more accommodative to counter a slowing global economy.

Market participants still expect the Fed to cut interest rates at its July 30-31 policy meeting, despite the latest developments in trade talks.

The Dow Jones Industrial Average fell 42.03 points, or 0.16%, to 26,675.4, and the S&P 500 lost 1.08 points, or 0.04%, to 2,963.25. The Nasdaq Composite dropped 6.16 points, or 0.08%, to 8,085.00.

Investors will be watching out for the monthly jobs report on Friday, which is expected to show that the private sector added 160,000 jobs in June, after a sharp slowdown in jobs growth in May.

The report will follow a batch of discouraging manufacturing data in the past 24 hours from around the world that has rekindled growth fears.

Among stocks, Automatic Data Processing slipped 4.2%, the most among S&P 500 companies, after market sources said brokerage Jefferies is re-offering 8 million of the company’s shares at a discount.

Coty Inc dropped for the second straight day, down 2.4% as multiple brokerages cut price targets on the cosmetics maker’s shares.

Gilead Sciences Inc rose 1.30% after the drugmaker said it will submit a new drug application for its arthritis drug to the U.S. FDA this year.

Declining issues outnumbered advancers for a 1.08-to-1 ratio on the NYSE and for a 1.35-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 32 new highs and 17 new lows. (Reporting by Shreyashi Sanyal & Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)