NEW YORK: US stocks edged lower on Wednesday as videogame makers gave disappointing revenue forecasts and investors awaited developments on U.S.-China trade relations.
The benchmark S&P 500 and the Nasdaq were weighed by declines in shares of Electronic Arts Inc, which tumbled 13.3 percent after the videogame publisher forecast full-year revenue below Wall Street estimates. The sharp drop pulled down shares of rival videogame publisher Activision Blizzard Inc, which fell 10.1 percent.
Shares of industry peer Take-Two Interactive Software Inc also dropped sharply, 13.8 percent, after the company's similarly underwhelming forecast.
The slump in videogame stocks contributed to a 1.5 percent decline in the S&P 500 communication services sector, the largest drop among the S&P's major sectors.
Despite the fall, Wall Street's indexes remained near two-month highs. A 7.3 percent gain in the S&P 500 would put the index above its record closing September high.
"The market is feeling a little exhausted after we've had a nice run in January and early February," said Nathan Thooft, global head of asset allocation at Manulife Asset Management in Boston.
Investors cited a void of catalysts for market gains.
"Trade talks are probably the thing that's really intriguing to the market, but that's in March," said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh, referring to the deadline for the United States and China to reach a trade agreement before additional tariffs go into effect.
The Dow Jones Industrial Average fell 21.22 points, or 0.08 percent, to 25,390.3, the S&P 500 lost 6.09 points, or 0.22 percent, to 2,731.61 and the Nasdaq Composite dropped 26.80 points, or 0.36 percent, to 7,375.28.
U.S. Treasury Secretary Steven Mnuchin said trade talks with China last week were "very productive" and confirmed that he and other officials will travel to Beijing for the next round of meetings.
Federal Reserve Chairman Jerome Powell will speak on Wednesday at 7:00 p.m. ET (0000 GMT) in Virginia.
Though the major indexes drooped, the Philadelphia SE Semiconductor Index advanced 2.6 percent. Shares of Apple supplier Skyworks Solutions Inc jumped 11.5 percent after the company announced $2 billion in stock buybacks, while shares of Microchip Technology rose 7.3 percent after the company suggested the chipmaker industry was close to recovery from its recent downturn.
Shares of Capri Holdings Ltd, formerly Michael Kors, climbed 11.3 percent after the fashion company posted a better-than-expected quarterly profit and raised its revenue forecast.
Anadarko Petroleum Corp shares slid 7.4 percent after the oil and gas producer's fourth-quarter profit missed analyst estimates.
Declining issues outnumbered advancing ones on the NYSE by a 1.50-to-1 ratio; on the Nasdaq, a 1.09-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and two new lows; the Nasdaq Composite recorded 39 new highs and 17 new lows.
Volume on U.S. exchanges was 6.70 billion shares, compared to the 7.50 billion average over the last 20 trading days.
Meanwhile the Australian dollar tumbled on Wednesday after the country's central bank signaled a possible interest-rate cut in the latest indication that a global economic slowdown is tilting policymakers toward looser monetary policy, while a gauge of world equity markets edged off two-month highs.
Australia’s central bank was the latest to signal policy easing in the face of economic headwinds. Last week, the U.S. Federal Reserve said it would be patient on further rate hikes as Fed Chairman Jerome Powell said the case for rate increases had "weakened," and the European Central Bank sounded less certain that it will start tightening policy later this year.
The about-face pushed the Australian dollar down 1.62 percent against the U.S. dollar, putting it on track for its biggest daily drop since November 2016. In turn, the U.S. dollar moved higher against a basket of major currencies.
"We are starting to see central banks follow Powell’s lead," said Chris Gaffney, president of world markets at TIAA Bank in St. Louis. "That’s what’s actually contributed to this dollar rally that we have seen recently."
The dollar index, which tracks the greenback against six major currencies, rose 0.32 percent. The euro was down 0.42 percent to $1.1364. The index was on pace for a fifth day of gains.
European stocks were buoyed by gains in Italian banks and tech stocks.
The pan-European STOXX 600 index rose 0.15 percent while MSCI's gauge of stocks across the globe shed 0.28 percent.
Benchmark U.S. 10-year notes last rose 3/32 in price to yield 2.6946 percent, from 2.704 percent late on Tuesday.
Signs of strong U.S. demand for distillate products and tightening global crude supply boosted oil prices, but gains were capped by the rising U.S. dollar and ongoing concerns about a global economic slowdown.
U.S. crude settled up 0.7 percent at $54.01 a barrel, while Brent settled at $62.69 a barrel, up 1.2 percent.- Reuters