Indexes end lower as investors consider tariff impact on company results
In addition, U.S. President Donald Trump said the U.S. could impose a "small tariff" on pharmaceutical imports before increasing the rate subsequently. He also signaled an announcement on tariffs on semiconductors and chips in the "next week or so."
Shares of KFC parent Yum Brands (YUM.N), opens new tab fell after the company missed estimates for the second quarter, as steep trade duties restricted consumer spending.
Caterpillar (CAT.N), opens new tab warned of an up to $1.5 billion hit in 2025.
The results come at the tail end of the U.S. reporting period for the second quarter.
"If you look at results, they are trending above low-bar expectations," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota.
"The impact of tariffs remains a work in progress. We're not seeing any meaningful impact on company profitability with tariffs. We do know, however, that they loom."
According to preliminary data, the S&P 500 (.SPX), opens new tab lost 30.75 points, or 0.49%, to end at 6,299.19 points, while the Nasdaq Composite (.IXIC), opens new tab lost 136.92 points, or 0.65%, to 20,916.66. The Dow Jones Industrial Average (.DJI), opens new tab fell 61.56 points, or 0.14%, to 44,112.08.
Earlier in the day, data showed ISM's nonmanufacturing purchasing managers index (PMI) slipped to 50.1 last month from 50.8 in June, as little changes in orders and weaker hiring, alongside rising input costs.
"Today's market action reflects investors that are merely in pause mode," Sandven said.
While the backdrop for equities remains constructive for the year, "clearly near-term there are some headwinds," he said, including elevated valuations given recent record highs in the S&P 500.
In other company news, Marriott International (MAR.O), opens new tab cut its annual forecast on slowing travel demand.
Stocks sold off on Friday after a disappointing July jobs data and sharp downward revisions to prior months, but indexes bounced back on Monday.
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