The S&P 500 and the Dow Industrials were on track to fall for the third straight session on Tuesday, as investors worried over warnings of a hit to earnings from the US-China trade dispute and reined in hopes of a steep interest rate cut this month.
In the latest indication of the trade war hurting businesses, German chemicals giant BASF forecast a 30pc fall in its adjusted annual profit, triggering a near 1pc fall in shares of US chemical companies.
Adding to the downbeat mood, RBC Capital Markets downgraded 3M Co to "sector perform", citing macro pressures from China, auto and electronics sectors. The industrial conglomerate's shares fell 2.4pc and pulled down the S&P industrial sector 0.57pc.
Boeing Co slipped 0.4pc after reporting a 37pc drop in deliveries in the first half of 2019, hurt by the grounding of its best-selling 737 MAX jets.
"The negative (BASF) guidance is concerning in many ways for investors. I don't think it is particularly surprising considering the trade uncertainty that is lingering over the market at the moment," said Mike Dowdall, investment strategist for BMO Global Asset Management in Chicago.
Second-quarter earnings season is expected to start in earnest next week and profits at S&P 500 companies are set to dip 0.2pc from a year earlier, according to Refinitiv IBES data.
Stocks have retreated from their record closing highs since a robust June jobs report on Friday tempered expectations of an aggressive 50 basis point interest rate cut by the Federal Reserve.
Focus this week will be on Fed chief Jerome Powell's remarks at his two-day testimony before the Congress, starting Wednesday. Also due on Wednesday is the central bank's June policy meeting minutes.
On the trade front, White House economic adviser Larry Kudlow said China was expected to move forward with agricultural purchases from the United States as trade talks resumed between the two countries after a two-month hiatus.
"The bar on trade, similar to earnings, is very low at the moment," said Dowdall. "As long as there is no further escalation from here, that should be market neutral to potentially market positive."
At 11:13 a.m. ET, the Dow Jones Industrial Average was down 82.19 points, or 0.31pc, at 26,723.95, and the S&P 500 was down 1.05 points, or 0.04pc, at 2,974.90.
The Nasdaq Composite was up 18.48 points, or 0.23pc, at 8,116.87.
Gains in Amazon.com, Facebook Inc and Netflix propped up the Nasdaq.
Netflix rose 1.8pc after Cowen and Co said the video streaming services provider would benefit from high viewership for the recently released third series of its original show "Stranger Things".
Interest-rate sensitive banks reversed course to trade 0.59pc higher as US Treasury yields rose.
Declining issues outnumbered advancers for a 1.54-to-1 ratio on the NYSE and for a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and no new low, while the Nasdaq recorded 32 new highs and 37 new lows.
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