S&P, Dow pare losses as bank, consumer stocks rise

By Tanya Agrawal

REUTERS - The S&P 500 and the Dow Jones Industrial Average pared early losses in late morning trading on Tuesday as bank and consumer stocks rose on robust consumer confidence data, while the Nasdaq Composite was dragged lower by a fall in technology shares.

Data showed consumer confidence for June rose more-than-expected, which could bolster the Federal Reserve's case for another rate hike this year.

However, a steep fall in oil prices and a flattening yield curve have added to concerns over inflation, which remains below the Fed's 2 percent target.

"The consumer remains confident and given that consumers drive two-thirds of the economy, that to me says, perhaps the news of a slowdown may be oversold," said Brad McMillan, Chief Investment Officer for Commonwealth Financial.

The financial index rose 0.89 percent, leading the gainers among the major S&P sectors, as investors expect the central bank to look through a slowdown in inflation and continue on their current path for rate hikes.

Bank of America was up 1.4 percent and JPMorgan rose 0.8 percent, providing the biggest boost to the S&P.

The consumer discretionary index sector inched up 0.12 percent, with Home Depot boosting the Dow.

Fed Chair Janet Yellen is scheduled to take part in a discussion on global economic issues in London at 1 p.m. ET (1700 GMT). Investors expect Yellen to offer more insight into the state of the U.S. economy.

"I think at this point the Fed is more or less committed to raising rates as they're more worried about being behind the curve and reloading the gun in case of a recession," added McMillan.

Philadelphia Fed President Patrick Harker said on Tuesday the Fed rightly plans to raise rates once more this year, given recent inflation weakness is likely temporary.

At 11:03 a.m. ET, the Dow Jones Industrial Average was up 21.18 points, or 0.1 percent, at 21,430.73, the S&P 500 was up 0.36 points, or 0.01 percent, at 2,439.43.

The Nasdaq Composite index was down 15.49 points, or 0.25 percent, at 6,231.66.

The technology index fell 0.39 percent due to a drop in the shares of Apple, Microsoft and Alphabet.

Alphabet fell 1 percent to $962.64 after EU antitrust regulators hit the tech giant with a record $2.7 billion fine.

Since the beginning of the year, the tech index has jumped about 19 percent, making it the biggest force behind the S&P's record-setting rally.

However, the sector has come under pressure of late over concerns about lofty valuations.

Sprint rose 5.6 percent after the fourth-largest U.S. wireless service provider was said to be in talks with Charter Communications and Comcast about a wireless partnership. Comcast and Charter were down about 0.35 percent.

Advancing issues outnumbered decliners on the NYSE by 1,563 to 1,178. On the Nasdaq, 1,351 issues rose and 1,318 fell.

(Reporting by Tanya Agrawal; Editing by Anil D'Silva and Arun Koyyur)