Wall St. down as geopolitical fears cause risk-off trade

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks eased on Wednesday as investors sought shelter in defensive shares and other low-risk assets amid lingering geopolitical concern.

Industrials and materials were the biggest drags along with financials, while utilities, staples and telecommunications gave the S&P 500 its biggest lift.

The S&P financial index <.SPSY> was down 0.7 percent a day before three major banks are due to report results in what will be the start of the corporate earnings season. Analysts are expecting earnings to have risen 10 percent in the first quarter, Thomson Reuters data shows.

"Short term, it's more policy driven than it is earnings driven," said Mark Lamkin, chief executive of Lamkin Wealth Management in Louisville, Kentucky.

 

But, he said, "Eventually the market always follows earnings. If we get closer to that double-digit gain, we'll stay fully invested. If that surprises to the light side, we'll get more defensive."

The United States launched missiles at a Syrian airfield last week to retaliate for a deadly gas attack on civilians. The strikes pushed President Donald Trump, who came to power in January calling for warmer ties with Syria's ally Russia, and his administration into confrontation with Moscow.

Investors are concerned that these developments could distract Trump from pursuing pro-business policies such as tax cuts, simpler regulations and higher infrastructure spending, promises that have powered Wall Street to record highs since his election in November.

The S&P 500 fell below its 50-day moving average, an indicator of the intermediate-term trend. At the same time, gold and CBOE Volatility index <.VIX>, Wall Street's fear gauge, rose.

The Dow Jones Industrial Average <.DJI> was down 57.76 points, or 0.28 percent, to 20,593.54, the S&P 500 <.SPX> had lost 8.64 points, or 0.37 percent, to 2,345.14 and the Nasdaq Composite <.IXIC> had dropped 26.27 points, or 0.45 percent, to 5,840.51.

Wells Fargo, along with Citigroup and JPMorgan are due to report results on Thursday, the last trading day of the week ahead of the Good Friday holiday.

Delta Air Lines was up 0.5 percent at $45.51, boosted by a better-than-expected quarterly profit and an upbeat forecast for current-quarter passenger unit revenue.

Declining issues outnumbered advancing ones on the NYSE by a 2.34-to-1 ratio; on Nasdaq, a 2.24-to-1 ratio favoured decliners.

The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 49 new highs and 34 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila and James Dalgleish)