Wall Street fell on Tuesday, led lower by consumer stocks after tepid consumer confidence data, but the S&P 500 was on pace to show gains for May.
U.S. consumer spending recorded its biggest increase in more than six years in April as households stepped up purchases of automobiles, but other data showed an ebb in consumer confidence in May.
Consumer staples .SPLRCS were the worst performing sector, off 0.74 percent, while consumer discretionary shares .SPLRCD fell 0.46 percent.
Energy shares .SPNY dropped 0.71 percent as oil prices turned lower. Nine of 10 S&P sectors were in the red in afternoon trading.
The Dow Jones industrial average .DJI was down 121.56 points, or 0.68 percent, at 17,751.66, the S&P 500 .SPX lost 8.04 points, or 0.38 percent, at 2,091.02 and the Nasdaq Composite .IXIC dipped 1.53 points, or 0.03 percent, at 4,931.97.
Investors will be parsing through economic data, including Friday's employment report, to gauge whether the U.S. Federal Reserve will raise interest rates as soon as its June 14-15 meeting. The central bank caught investors off guard earlier this month when it signaled its next rate hike could be just weeks away.
"The market is getting used to the idea of potentially higher rates and the Fed hiking this summer," said Aaron Jett, vice president of global equity research at Bel Air Investment Advisors in Los Angeles. "It’s been an amazing change in sentiment compared to the middle of February where people were ready to jump out of the window."
After a rough start to the year amid jitters about the global economy and volatility in the oil market, the S&P 500 was set for its third straight month of gains, its first such streak in two years. The benchmark index is up more than 2 percent in 2016.
For May, the Nasdaq was set to end up more than 3 percent - the best performance of the three major indexes - while the Dow was slightly negative for the month.
On Tuesday, Apple's (AAPL.O) 1 percent decline was the biggest drag on the S&P and the Nasdaq, while Boeing's (BA.N) fall of 2.3 percent pulled down the Dow.
Disney (DIS.N), another Dow component, was down 1.7 percent. The studio's latest release, "Alice Through the Looking Glass," received poor reviews.
Great Plains Energy Inc (GXP.N), the owner of regulated power utility Kansas City Power & Light, will buy bigger rival Westar Energy Inc (WR.N) for $8.6 billion, the largest deal in the U.S. electricity distribution market so far this year. Westar jumped 7.2 percent, while Great Plains fell 5.8 percent.
Celator Pharma (CPXX.O) surged 71.1 percent to $29.99 after agreeing to be bought by Jazz Pharma (JAZZ.O) for about $1.5 billion. The Nasdaq Biotechnology index .NBI rose 1.1 percent.
Declining issues outnumbered advancing ones on the NYSE by 1,579 to 1,426, for a 1.11-to-1 ratio on the downside; on the Nasdaq, 1,499 issues rose and 1,303 fell for a 1.15-to-1 ratio favoring advancers.
The S&P 500 posted 24 new 52-week highs and no new lows; the Nasdaq recorded 73 new highs and 13 new lows.
(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza and Nick Zieminski)
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