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* Fed policy meeting to start on Tuesday
* Mylan to combine with Pfizer’s off-patent drugs unit
* Dow up 0.16%, S&P 500 off 0.20%, Nasdaq down 0.62% (Updates to early afternoon)
By Shreyashi Sanyal
July 29 (Reuters) - A fall in shares of Amazon and Facebook pulled the S&P 500 and Nasdaq indexes lower on Monday as investors looked ahead to major tech earnings including that of Apple to assess the impact of U.S.-China trade tensions.
The S&P 500 technology sector, the benchmark index’s best performer so far this year, dropped 0.1%, while the consumer discretionary sector fell 0.91%.
However, a rise in shares of Apple Inc ahead of its quarterly report after markets close on Tuesday helped support the blue-chip Dow Industrials index.
“Apple’s results will be a good read into trade and the situation with China and if Apple has a good number it would be a stabilizing force for the technology sector,” said Craig Hodges, portfolio manager with Hodges Funds in Dallas, Texas.
The S&P 500 index has risen 2.7% this month on hopes that the Federal Reserve would take a more dovish approach to counter the impact of a protracted U.S.-China trade war, which has helped Wall Street’s main indexes scale record levels this month.
But the market’s recovery from a torrid month of trading in May have also been dependent on other indicators like earnings not being so robust as to make the U.S. central bank hold fire.
Data from Refinitiv shows 76% of the 222 S&P 500 companies that have reported earnings so far have topped profit estimates, but reports on the U.S. economy went in the opposite direction, supporting action by the Fed.
A quarter point cut to bolster the amount of capital coursing through financial markets and support borrowing by ordinary Americans is fully priced in for Wednesday and policymakers’ comments on what next would define whether a rally since May continues.
The Fed’s rate-setting committee will release its policy statement at 2 p.m. EDT (1800 GMT) on Wednesday after the end of a two-day meeting and Chairman Jerome Powell will hold a press conference shortly after.
Investors will watch Powell’s speech for clues on whether it is just an insurance cut or the start of a tightening cycle, said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
Among other stocks, Mylan NV jumped 14.17% after it confirmed reports over the weekend that it was combining with Pfizer Inc’s off-patent branded and generic established medicines business to form a new global player.
Pfizer fell 1.69% after the drugmaker cut its full-year profit and revenue forecast in an unexpected release of its quarterly results to go with the deal announcement.
The Dow Jones Industrial Average was up 42.20 points, or 0.16%, at 27,234.65, the S&P 500 was down 6.11 points, or 0.20%, at 3,019.75. The Nasdaq Composite was down 51.25 points, or 0.62%, at 8,278.96.
Among other decliners, the communication services sector fell 0.69% following a 3% surge on Friday owing to upbeat results from Google-parent Alphabet Inc.
Defensive real estate and consumer staples as well as healthcare stocks were among the few trading in positive territory.
Declining issues outnumbered advancers for a 1.16-to-1 ratio on the NYSE and for a 1.51-to-1 ratio on the Nasdaq.
The S&P index recorded 32 new 52-week highs and three new lows, while the Nasdaq recorded 54 new highs and 89 new lows. (Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)