S&P, Nasdaq flat as investors focus on healthcare bill

By Tanya Agrawal

REUTERS - The S&P and the Nasdaq were little changed in choppy late-morning trading on Wednesday as investors remained cautious ahead of the first major legislative test of Donald Trump's presidency.

The Dow was lower, pulled down by a 5.8 percent fall in Nike after the world's largest footwear maker missed quarterly revenue estimates.

All the three major indexes were on track for their first monthly loss since October.

Investors are closely watching the outcome of the healthcare bill, which Republican party leaders are aiming to move in the House as early as Thursday, as a signal to how Trump can push forward his tax cuts and simpler regulation agenda.

Trump on Tuesday tried to rally Republican lawmakers behind the plan, which will dismantle Obamacare.

Some investors fear that if the healthcare reform act runs into trouble or takes longer-than-expected to pass, then Trump's tax reform policies may face setbacks.

The concerns triggered the biggest one-day fall since before the election on Wall Street on Tuesday.

"I don't think Trump's agenda will be a total failure," said Tim Ghriskey, chief investment officer of Solaris Group in New York.

"We look at this as short-term profit taking and scaling back of time expectations. We're just taking off some of the froth."

Sentiment was also hit by a fall in oil prices, which touched four-month lows after data showed U.S. crude inventories rising faster than expected. [O/R]

U.S. 10-year Treasury yields fell to their lowest level since the end of February and the gap between U.S. and German 10-year government borrowing costs hit its narrowest since November.

The S&P 500 has run up about 10 percent since the election in November, spurred mainly by Trump's agenda of tax cuts and infrastructure spending, but valuations have emerged as a concern.

The benchmark index is trading at about 18 times forward earnings estimates against the long-term average of 15, according to Thomson Reuters data.

"This has been a really long rally and we finally saw a crack develop yesterday and some people are looking to true-up their portfolios and rotate a bit," said Nate Thooft, co-head of global asset allocation at Manulife Asset Management in Boston.

At 11:00 a.m. EDT (1500 GMT) the Dow Jones Industrial Average was down 37.66 points, or 0.18 percent, at 20,630.35, the S&P 500 was up 0.81 points, or 0.03 percent, at 2,344.83.

The Nasdaq Composite was up 14.19 points, or 0.24 percent, at 5,808.02.

Nine of the 11 major S&P sectors were lower, with the telecommunications index's 1.22 percent fall leading the decliners.

The financial sector, which suffered its worst daily drop since June on Tuesday, recouped losses and was up 0.11 percent. Bank of America, JPMorgan, Citigroup and Wells Fargo were up about 0.5 percent.

Gold prices rose to a three-week high and the dollar index, which measures the greenback against a basket of currencies, was at 99.69, hovering near the six-week low of 99.64 reached on Tuesday.

Sears Holdings slumped 12.9 percent to $7.92 after the retailer warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales.

Declining issues outnumbered advancers on the NYSE by 1,814 to 909. On the Nasdaq, 1,759 issues fell and 827.

The S&P 500 index showed eight new 52-week highs and 10 new lows, while the Nasdaq recorded 12 new highs and 53 new lows.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)