US STOCKS-Wall Street rally loses steam as industrials drag

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* Main indexes erase early gains
* United Technologies, Raytheon weigh on industrials
* Symantec falls after Morgan Stanley downgrade
* Indexes down: Dow 0.05%, S&P 0.09%, Nasdaq 0.10%

(Updates to early afternoon)
By Aparajita Saxena and Shreyashi Sanyal
June 11 (Reuters) - Wall Street's main indexes gave up gains
to trade slightly lower on Tuesday, as declines in industrial
companies dampened early optimism over easing trade tensions and
the prospect of an interest rate cut by the Federal Reserve.
The industrial sector .SPLRCI fell 1.09%, weighed down by
losses in United Technologies Corp UTX.N and Raytheon Co
RTN.N .
United Technologies fell 4.1% and Raytheon 4.9%, a day after
U.S. President Donald Trump gave mixed signals on whether he
believed the $121 billion merger between the companies should go
forward. Optimism over Trump's decision late on Friday to hold off
import tariffs on Mexico has helped markets rally this week,
even though the United States warned it would impose tariffs if
its demands were not satisfied. Separately, Trump said he would impose more tariffs on
Chinese imports if there was no progress in talks with Chinese
President Xi Jinping at the G20 summit.
"The unresolved trade dispute with China is still a ceiling
on the stock market," said Greg McBride, senior vice president
and chief financial analyst at Bankrate in Palm Beach, Florida.
"Don't expect the S&P 500 to get back to the record high
until the trade agreement is signed or close to being signed."
The benchmark index .SPX is now just about 2.4% away from
its early May all-time high.
Meanwhile, the market is betting on an interest rate cut in
July and two more this year as Trump's hard bargaining on trade
with Beijing and others could push the economy back into
recession. MMT/
However, U.S. producer prices increased solidly for a second
straight month in May, in line with expectations of economists
polled by Reuters, pointing to a steady pickup in underlying
inflation pressures.
At 12:45 p.m. EDT, the Dow Jones Industrial Average .DJI
was down 13.89 points, or 0.05%, at 26,048.79, the S&P 500
.SPX was down 2.55 points, or 0.09%, at 2,884.18 and the
Nasdaq Composite .IXIC was down 8.08 points, or 0.10%, at
7,815.09.
A decline in technology stocks .SPLRCT , including
Microsoft Corp MSFT.O , Mastercard Inc MA.N and Adobe Inc
ADBE.O , also added pressure to the indexes.
Symantec Corp SYMC.O fell 2.8%, after Morgan Stanley
downgraded the antivirus software maker's stock, citing
increased competition.
Declining issues outnumbered advancers for a 1.05-to-1 ratio
on the NYSE and for a 1.33-to-1 ratio on the Nasdaq.
The S&P index recorded 49 new 52-week highs and three new
lows, while the Nasdaq recorded 51 new highs and 73 new lows.