US STOCKS-Wall Street dips as financials weigh, trade hopes dim

* U.S. yield curve inversion deepens; Financials fall
* J&J up after opioid lawsuit decision
* Dow down 0.35%, S&P 500 down 0.28%, Nasdaq down 0.39%

(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Aug 27 (Reuters) - Wall Street slipped on Tuesday,
weighed down by financial stocks as a deepened yield curve
raised U.S. recession worries, while uncertainty reigned on the
progress of trade negotiations between the U.S. and China.
U.S, stocks initially opened higher, building on Monday's
advance, as U.S. President Donald Trump predicted another round
of talks with Beijing. China's foreign ministry, however,
reiterated on Tuesday that it had not received any recent U.S.
telephone call on trade. Further weighing on sentiment was a deepening of the
inversion in the yield curve between the 2-year and 10-year U.S.
Treasuries US2US10=RR , underscoring worries about a weakening
global economy. "The progression of trade talks seem to occur very much in
real time and it is the primary influence around what it is
driving the capital markets at this point," said Bill Northey at
U.S. Bank Wealth Management in Minneapolis.
"You have this degree of uncertainty and what has seemed to
be a period of heightened uncertainty, that certainly does
impact confidence and confidence does drive behaviors like
spending and investing, which ultimately manifest in economic
activity."
The Dow Jones Industrial Average .DJI fell 94.15 points,
or 0.36%, to 25,804.68, the S&P 500 .SPX lost 8.7 points, or
0.30%, to 2,869.68 and the Nasdaq Composite .IXIC dropped
32.57 points, or 0.41%, to 7,821.16.
Financial shares .SPSY , which tend to weaken in lower rate
and soft economic environments, lost 0.84%, while defensive
sectors such as utilities .SPLRCU and real estate .SPLRCR
led advancing sectors.
The S&P 500 has lost nearly 4% in August on worries the
impact of the intensifying U.S.-China trade war will have on the
slowing global economy and corporate profits, along with
uncertainty around the pace of U.S. interest rate cuts from the
Federal Reserve.
With the next Federal Reserve meeting scheduled for
mid-September, investors are gauging the strength of the U.S.
economy for clues on where rates are headed. They will have data
on the labor market and manufacturing next week to consider
before the policy announcement.
Among stocks, Johnson & Johnson JNJ.N shares rose 1.93%
after an Oklahoma judge said J&J must pay $572.1 million for its
part in fueling the U.S. opioid epidemic, a sum that was
substantially less than what investors had expected.
Philip Morris International PM.N shares fell 7.42% after
the tobacco maker said it was in talks with Altria Group Inc
MO.N to combine in an all-stock merger of equals. Altria's
shares were down 3.53%. Shares in J. M. Smucker Co SJM.N tumbled 7.03% after the
packaged food maker cut its full-year earnings forecast and
missed estimates for quarterly profit and sales. Declining issues outnumbered advancing ones on the NYSE by a
1.57-to-1 ratio; on Nasdaq, a 2.51-to-1 ratio favored decliners.
The S&P 500 posted 28 new 52-week highs and 29 new lows; the
Nasdaq Composite recorded 33 new highs and 188 new lows.