US stock indexes edged lower on Tuesday as results from Wall Street's big lenders rekindled concerns about banks coming under pressure to boost profits when the Federal Reserve is seen cutting interest rates as early as this month.
JPMorgan Chase & Co and Wells Fargo & Co beat quarterly profit estimates but reported weaker net interest income, pointing to rising deposit costs.
"Much of the outlook remains very unclear for the sector, with falling rates and the potential for further economic weakness in the United States," said Joshua Mahony, senior market analyst with IG. "The banks must show that they can continue to perform in an environment of lower rates and less help from the government."
The banking subsector was down 0.19pc, compared to a marginal gain in the S&P 500 financial index.
JPM was marginally higher, while Goldman Sachs Group Inc - the least rate-sensitive of the three banks that reported - rose 1.2pc. Wells Fargo slipped 2.1pc.
The three indexes moved lower after President Donald Trump said there was a long way to go with China on trade and threatened to put tariffs on another $325 billion of Chinese goods.
Earnings season gathers steam this week and profit at S&P 500 companies is likely to dip 0.1pc, which would be the first quarterly drop in three years, according to Refinitiv IBES data.
J.B. Hunt Transport Services Inc jumped 7.1pc, the biggest gainer on the benchmark S&P 500, after the transport and logistics provider posted strong quarterly performance in its second biggest unit DCS.
The gains also lifted the Dow Jones transport index 2.31pc higher and helped industrials rise 0.7pc, one of the four major S&P sectors in positive territory.
At 12:08 p.m. ET, the Dow Jones Industrial Average was down 33.01 points, or 0.12pc, at 27,326.15, and the S&P 500 was down 8.13 points, or 0.27pc, at 3,006.17.
The Nasdaq Composite was down 30.26 points, or 0.37pc, at 8,227.92.
Dow Industrials member Johnson & Johnson fell 1.4pc after the diversified healthcare company warned that competition from generic and copycat drugs could impact its third-quarter results.
Economic data was a bright spot. A Commerce Department report showed retail sales increased more than expected in June, while a Federal Reserve report indicated that US manufacturing output accelerated for the second straight month.
Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq.
The S&P index recorded 50 new 52-week highs and one new low, while the Nasdaq recorded 61 new highs and 45 new lows.
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