By Yashaswini Swamynathan
(Reuters) - U.S. stocks see-sawed on Tuesday as investors assessed the prospects of an interest rate hike in the coming months.
The markets lost some momentum after the International Monetary Fund (IMF) lowered its growth forecast for the U.S. economy to 1.6 percent from 2.2 percent this year and painted a gloomy picture of the global economy.
Ten of the 11 major S&P 500 indexes were down, with the high dividend-paying sectors, telecom services and utilities, taking the biggest hit.
Financials rose 0.68 percent after Richmond Federal Reserve President Jeffrey Lacker said he would have voted in favor of a rate hike at the last policy meeting had he been able to do so.
His view comes a day after Cleveland Fed president Loretta Mester said the central bank should not delay a rate increase, highlighting the growing pressure on Fed Chair Janet Yellen to pull the trigger.
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Traders have priced in a 63 percent chance of the Fed raising interest rates in December, according to the CME Group's FedWatch tool.
Financials were also helped by the ebbing fears about the health of Deutsche Bank, whose Frankfurt-listed stock closed up 1.5 percent after major clients and rivals extended support to the bank, which is negotiating with U.S. authorities over a multi-billion dollar penalty.
Deutsche Bank's U.S.-listed stock was up 3 percent, while shares of Bank of America, Citigroup and JPMorgan also gained.
"The market is in a position where it is sensitive to news. So it is going to be a back-and-forth day, driven by various news stories that come out," said Randy Frederick, managing director of trading and derivatives at Charles Schwab in Austin, Texas.
At 12:22 p.m. ET (1622 GMT), the Dow Jones Industrial Average was down 27.02 points, or 0.15 percent, at 18,226.83.
The S&P 500 was down 3.38 points, or 0.16 percent, at 2,157.82.
The Nasdaq Composite was up 2.77 points, or 0.05 percent, at 5,303.64.
Apple rose 0.7 percent and was the top influence on the three major indexes. The iPhone maker extended the global reach of Apple Pay by launching the software in Russia.
Sears surged 12 percent after Bloomberg reported that the department store chain's Craftsman tool brand had attracted multiple bidders.
Darden shares rose 4.6 percent to $64.15 in premarket trading after the restaurant chain operator reported a rise in first-quarter sales.
Declining issues outnumbered advancing ones on the NYSE by 1,749 to 1,130. On the Nasdaq, 1,383 issues fell and 1,325 advanced.
The S&P 500 index showed 13 new 52-week highs and four new lows, while the Nasdaq recorded 72 new highs and 19 new lows.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)