US STOCKS-Wall St dragged down by Iran tensions, trade worries; Fed in focus

* Bank stocks weigh the most on S&P
* AbbVie slides after $63 bln deal to buy Allergan
* Lennar rises after qtrly profit beat
* Fed Chair Jerome Powell to speak at 1:00 p.m. ET
* Indexes down: Dow 0.16%, S&P 0.18%, Nasdaq 0.27%

(Updates to open)
By Medha Singh
June 25 (Reuters) - Wall Street's main indexes slipped on
Tuesday, as bank stocks fell ahead of a handful of speeches by
Federal Reserve officials, while escalating tensions in the
Middle East and trade jitters added to the dour mood.
At least five Fed policy makers are speaking later in the
day, including Chair Jerome Powell, and markets assume they will
stick with the recent message that rates could be about to be
cut for the first time since the financial crisis.
Traders fully expect an rate cut from the U.S. central bank
in July and see a 40% chance of a 50 basis point move, CME
Group's FedWatch program showed.
Rate-sensitive bank stocks .SPXBK were down 1%, as U.S.
benchmark yields fell below the closely watched 2% level.
Dampening hopes of a U.S.-China trade deal at the G20 summit
later this week, a senior U.S. official said President Donald
Trump is "comfortable with any outcome" from the talks with his
Chinese counterpart. "It is unlikely that any resolution of the trade situation
will take place until after the next Fed meeting late next
month," said Robert Johnson, chief executive officer at Economic
Index Associates in New York.
A trade resolution will allow the Fed to forestall any
interest rate cut, Johnson said. "I believe what Trump wants is
both a Fed rate cut and to declare victory in the trade dispute
with China."
In a dramatic and unprecedented move, Trump on Monday
imposed new sanctions on Iran's supreme leader and foreign
minister, a decision Tehran said closed the path to diplomacy
between the countries. The rising tension prompted a flight to the safety of
government bonds and the yen and Swiss franc.
At 9:55 a.m. ET the Dow Jones Industrial Average .DJI was
down 42.63 points, or 0.16%, at 26,684.91, the S&P 500 .SPX
was down 5.23 points, or 0.18%, at 2,940.12 and the Nasdaq
Composite .IXIC was down 21.66 points, or 0.27%, at 7,984.04.
Wall Street's main indexes have risen at least 7% this
month, with the S&P 500 .SPX hitting a record high last week,
on the prospect of more monetary stimulus for the economy.
A multibillion dollar deal helped the healthcare sector
.SPXHC rise 0.42%, the most among the three S&P sectors
trading higher.
AbbVie Inc ABBV.N said it would buy Botox-maker Allergan
Plc AGN.N for about $63 billion. AbbVie tumbled 14.2%, while
shares of Allergan surged 27.2%. Lennar Corp LEN.N rose 2.4% after the No. 2 U.S.
homebuilder reported a higher-than-expected quarterly profit,
helping the PHLX Housing index .HGX edge 0.4% higher.
Declining issues outnumbered advancers for a 1.15-to-1 ratio
on the NYSE and for a 1.06-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and four new
lows, while the Nasdaq recorded 12 new highs and 36 new lows.