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Stocks End Mostly Lower as Rally Fades 06/26 16:34

   Stocks closed slightly lower on Wall Street Wednesday after an early rally 
fueled by optimism over the next round of trade talks between the U.S. and 
China lost momentum toward the end of the day.

   (AP) -- Stocks closed slightly lower on Wall Street Wednesday after an early 
rally fueled by optimism over the next round of trade talks between the U.S. 
and China lost momentum toward the end of the day.

   The wobbly finish extended the S&P 500 index's losing streak to a fourth 
straight day, though the market is still on track to end the month with solid 

   Losses in health care stocks, consumer goods makers and utilities offset 
solid gains in technology sector companies.

   Stocks climbed in the morning after U.S. Treasury Secretary Steven Mnuchin 
told CNBC that a trade deal between the two nations was "about 90%" done during 
recent negotiations. President Donald Trump and Chinese President Xi Jinping 
are scheduled to meet at the G-20 summit this weekend and investors hope that 
talks will yield progress toward an agreement to resolve the costly trade war.

   Initial optimism over the possibility of progress on trade helped drive up 
shares in technology stocks, particularly chipmakers. The sector is especially 
vulnerable to trade disruptions with China, the world's second largest economy.

   The rally began to fade by midafternoon, however, as other sectors piled up 

   "The market has pulled back its expectations in terms of when an agreement 
will be signed and is just focusing on whether or not they can continue on a 
viable path toward constructive negotiations," said Quincy Krosby, chief market 
strategist at Prudential Financial.

   The S&P 500 index dropped 3.60 points, or 0.1%, to 2,913.78. The Dow Jones 
Industrial Average fell 11.40 points, or less than 0.1%, to 26,536.82. The 
index had been up as much as 111 points.

   The Nasdaq composite, heavily weighted with technology stocks, gained 25.25 
points, or 0.3%, to 7,909.97. The Russell 2000 index of smaller company stocks 
fell 3.26 points, or 0.2%, to 1,517.78.

   The market is on track to end June with solid gains that have reversed most 
of the losses from a big sell-off in May. Investors pushed stocks higher 
through much of this month as they welcomed indications from the Federal 
Reserve that it will cut interest rates to keep the economy growing. The trend 
sent the benchmark S&P 500 index to an all-time high last week.

   Worries of an economic slowdown have also prompted traders to shift money 
into less risky assets, such as U.S. government bonds and gold, which is on 
track for a 7.8% gain this month.

   The multiple trade disputes between the U.S. and other nations, most 
prominently China, remain the biggest source of uncertainty looming over Wall 

   This week's G-20 meeting in Osaka, Japan, is the first opportunity Trump and 
Xi have had to discuss their differences on trade face-to-face since Trump said 
he was preparing to target the $300 billion in Chinese imports that he hasn't 
already hit with tariffs, extending them to everything China ships to the 
United States.

   "The market does not want to see that they leave the G-20 meeting and 
there's no hope, no chance for negotiations," Krosby said.

   The two sides are in a stalemate after 11 rounds of talks that have failed 
to overcome U.S. concerns over China's acquisition of American technology and 
its massive trade surplus. China denies forcing U.S. companies to hand over 
trade secrets and says the surplus is much smaller than it appears once the 
trade in services and the value extracted by U.S. companies are taken into 

   How the trade war develops could affect whether central banks move to 
support their economies. Fed Chairman Jerome Powell this week noted that the 
economic outlook has become cloudier since early May amid uncertainty over 
trade and global growth. The Fed and the European Central Bank have indicated 
they are open to cutting interest rates if needed.

   Investors are worried the fallout from the tariffs could hurt global 
economic growth and corporate profits. Already, analysts are projecting that 
second quarter earnings for S&P 500 companies will be down 1.2%, according to 

   "You're headed into earnings season and there are real questions about what 
is the second quarter story going to have been in the face of what's turning 
into a pretty tough environment," said Rob Haworth, senior investment 
strategist at U.S. Bank Wealth Management. "The unanswered question for us is: 
Are tariffs worse than people think or not? Is the Fed having to help out 
because things are a little worse than we expected?"

   Health care stocks were the biggest drag on the market Wednesday, with 
drugmakers leading the way lower for the sector. Eli Lilly dropped 3.5% and 
Nektar Therapeutics slid 3.8%.

   Consumer products companies were also big decliners. General Mills slumped 
after the packaged foods maker reported weak sales trends in North America. The 
stock was the biggest loser in the S&P 500, falling 4.5%.

   Even after losing some strength, technology companies led the gainers. 
Micron Technology notched the biggest gain in the S&P 500 after the chipmaker 
forecast improved demand for smartphone chips the rest of the year. The stock 
jumped 13.3%. Other chipmakers also rose. Advanced Micro Devices climbed 3.7% 
and Nvidia gained 5.1%.

   Energy stocks rose along with the price of U.S. crude oil. Hess gained 5.1% 
and ConocoPhillips added 5%.

   Benchmark crude oil rose $1.55 to settle at $59.38 a barrel. Brent crude 
oil, the international standard, rose $1.44 to close at $66.49 a barrel.

   The televised Democratic presidential candidate debates on Wednesday and 
Thursday evening may weigh on health care stocks.

   Many of the candidates have been arguing for expanding Medicare to cover 
uninsured Americans of all ages or some other form of universal health care 
coverage that would run counter to the current private insurance market.

   "If 'Medicare For All' does not get a lot of air time or if other candidates 
criticize the proposal, we think that will be a positive for the market," 
Raymond James analyst Chris Meekins wrote in a research note Wednesday.

   Several health care providers were trading lower ahead of the first debate. 
UnitedHealth Group slid 1.7%, Anthem dropped 2.2% and Centene lost 3.5%.

   Major stock indexes in Europe were mostly lower Wednesday. 

   In other commodities trading, wholesale gasoline rose 10 cents to $1.97 per 
gallon. Heating oil climbed 5 cents to $1.97 per gallon. Natural gas fell 2 
cents to $2.29 per 1,000 cubic feet.

   Gold rose $1.60 to $1,413.30 per ounce, silver rose 99 cents to $15.28 per 
ounce and copper fell 3 cents to $2.71 per pound.

   The dollar rose to 107.83 Japanese yen from 107.12 yen on Tuesday. The euro 
weakened to $1.1370 from $1.1373. 


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