Wall Street falters on prospects of another government shutdown

By Amy Caren Daniel

(Reuters) - U.S. stocks gave up early gains and were struggling for direction on Monday, as investors weighed the possibility of another partial government shutdown and trade talks between the world's two largest economies resumed in Beijing.

Top Democratic and Republican negotiators on border security funding were scheduled to meet later in the day in a bid to reach a deal by a Friday deadline set by President Donald Trump to find a compromise.

"There is a looming threat of another shutdown, because if we go into another shutdown, it could last even longer than the previous one," said Matt Lloyd, chief investment officer, Advisors Asset Management in Monument, Colorado.

"Markets won't make a significant move in one direction until they can gauge where we stand on trade or the government shutdown."

China's upbeat tone on trade talks and White House senior counsellor Kellyanne Conway's bullish comments on a possible deal helped the three indexes open higher.

The gains soon evaporated as the healthcare sector fell 0.21 percent, pressured by a more than 1.5 percent drop in the shares of UnitedHealth Group, Pfizer Inc and Merck & Co. The stocks were also the biggest drags on the blue-chip Dow index.

The trade-sensitive industrials sector held on to gains and were last up 0.59 percent, the most among the 11 major S&P sectors, boosted by Caterpillar Inc's 1.01 percent rise.

At 12:42 p.m. ET, the Dow Jones Industrial Average was down 18.00 points, or 0.07 percent, at 25,088.33. The S&P 500 was up 3.39 points, or 0.13 percent, at 2,711.27 and the Nasdaq Composite rose 21.36 points, or 0.29 percent, to 7,319.56.

The benchmark S&P index is about 15 percent higher than its December lows, helped in part by a dovish Federal Reserve and largely upbeat earnings reports.

About 71 percent of the S&P 500 companies that have reported fourth-quarter earnings have topped estimates, according to IBES data from Refinitiv. But analysts' estimates for first-quarter earnings have turned negative for the first time since 2016.

Among other stocks, Electronics Arts Inc gained 5.1 percent, the most among S&P 500 companies, after analysts were upbeat about a strong start to the videogame publisher's newly launched rival to "Fortnite".

Rivals Take-Two Interactive Software Inc fell 3.1 percent and Activision Blizzard Inc, due to report results on Tuesday, dropped 5.7 percent.

Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.62-to-1 ratio on the Nasdaq.

The S&P index recorded 31 new 52-week highs and three new lows, while the Nasdaq recorded 55 new highs and 15 new lows.

(Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)