Wall Street flat as Walmart offsets bank losses; trade talks eyed

By Shreyashi Sanyal

(Reuters) - U.S. stocks struggled for direction on Tuesday as gains in Walmart offset losses in financials, with trade talks between the United States and China in focus.

Hopes that the two countries will hammer out a deal to end their protracted trade war kept the three major indexes near their two-month highs.

The talks in Washington follow a round of negotiations that ended in Beijing last week without a deal but which officials said had generated progress.

"A resolution on trade would remove a major headwind for the market," said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

"It would also remove a major source of uncertainty from companies, perhaps, enabling them to make decisions on spending with more clarity."

However, the tariff-vulnerable industrials sector dipped 0.35 percent, with bellwether Boeing Co down 0.6 percent.

The consumer staples sector rose 0.53 percent, the most among the 11 major S&P sectors, helped by a 3.8 percent rise in shares of Walmart Inc.

The big-box retailer reported an estimate-beating jump in holiday quarter comparable sales, helped by higher consumer spending and more e-commerce purchases.

Shares of fellow retailers were also higher, with Costco Wholesale Corp gaining 1.2 percent and Target Corp 1.6 percent.

"Walmart beat earnings expectations, likely bringing welcome relief to bulls invested in the retail industry after last week's dismal retail sales helped pressure stocks," Kinahan said.

A U.S. Commerce Department report last week showed U.S. retail sales recorded their biggest drop in more than nine years for December, stoking fears of an economic slowdown.

At 11:07 a.m. ET the Dow Jones Industrial Average was down 25.48 points, or 0.10 percent, at 25,857.77, the S&P 500 was up 0.50 points, or 0.02 percent, at 2,776.10 and the Nasdaq Composite was up 12.19 points, or 0.16 percent, at 7,484.60.

Investors will look for more clues on monetary policy when the central bank releases the minutes from its January meeting on Wednesday.

JPMorgan Chase & Co fell 1.5 percent and Goldman Sachs Group Inc dropped 1.1 percent, pushing the financial index 0.41 percent lower.

Medtronic Plc rose 1.1 percent after the medical device maker beat analysts' estimates for quarterly profit on higher sales in its surgical products unit and restorative therapies group.

Mattel Inc shares dropped 3.3 percent, after the company issued a disappointing 2019 sales forecast and said demand for its iconic Barbie doll was slowing.

With nearly 80 percent of S&P 500 companies having reported earnings so far, analysts now see a profit increase for the group of 16.3 percent for the fourth quarter, according to Refinitiv data.

The current quarter, however, does not look all that upbeat, with earnings expected to fall year-on-year for the first time since mid-2016.

Advancing issues outnumbered decliners by a 1.57-to-1 ratio on the NYSE and by a 1.30-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 68 new highs and 17 new lows.

(Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)