Wall St turns negative as bank stocks weigh

By Tanya Agrawal

(Reuters) - U.S. stocks reversed course to trade lower in late morning on Tuesday, pressured by a fall in bank shares.

The financial index led the laggards on the S&P 500 with a 0.72 percent fall. Bank of America was down 3.9 percent, weighing the most on the S&P 500, while Goldman Sachs, which was down 2.2 percent, pulled the Dow lower.

Last week, the Federal Reserve raised interest rated by 25 basis points, but stuck to its outlook for two more hikes this year, instead of the three expected by the market.

"People are absorbing the Fed decision and seeing what the impact from that will be," said Paul Springmeyer, investment managing director at the Private Client Reserve at U.S. Bank in Minneapolis, Minnesota.

Investors will keep an eye on speeches by several Federal Reserve officials for clues on the path of future interest rate hikes.

Bank of Kansas City President Esther George and Cleveland Fed chief Loretta Mester are scheduled to speak later in the day, while Boston Fed head Eric Rosengren will release the text of his speech.

The financial sector had gained the most since the U.S. election, rising 22 percent since early November, spurred by President Donald Trump's proposals of deregulation and tax reform.

All the three major U.S. indexes had opened higher, with the Nasdaq Composite hitting yet another record high, lifted by Apple.

Apple rose to an all-time high of $142.40 after the company unveiled a new version of its iPad tablet.

At 11:04 a.m. ET (1504 GMT) the Dow Jones Industrial Average was down 127.24 points, or 0.61 percent, at 20,778.62, the S&P 500 was down 15.1 points, or 0.63 percent, at 2,358.37.

The Nasdaq Composite was down 44.49 points, or 0.75 percent, at 5,857.04.

The market has also been treading water as investors fret about elevated valuations following the election.

The S&P 500 is trading at about 18 times forward earnings estimates against the long-term average of 15 times, according to Thomson Reuters data.

"Equity valuations are fair to full value right now and while we certainly remain constructive on equities, for the market to move forward, earnings will have to continue to move higher," said Springmeyer.

Lennar fell 2.7 percent to $51.21, after the second-largest U.S. homebuilder reported a drop in quarterly gross margin.

Declining issues outnumbered advancers on the NYSE by 2,088 to 698. On the Nasdaq, 2,069 issues fell and 628 advanced.

The S&P 500 index showed 25 new 52-week highs and five new lows, while the Nasdaq recorded 71 new highs and 43 new lows.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)