US STOCKS-Wall Street treads water as financials fall, trade hopes flicker

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* Financials fall most among 11 major S&P sectors
* J&J up after opioid lawsuit decision, lifts healthcare
* Smucker falls as forecast cut, earnings disappoint
* Indexes: Dow & S&P 500 flat, Nasdaq off 0.04%

(Updates prices, comments)
By Akanksha Rana
Aug 27 (Reuters) - Wall Street treaded water on Tuesday, as
a drop in financials and renewed concerns about a U.S. recession
offset early optimism about hopes of a resolution to the
protracted trade war with China.
U.S. stocks were up strongly earlier in the session,
building on gains from Monday after U.S. President Donald Trump
sought to ease tensions by predicting another round of talks
with Beijing. China's foreign ministry, however, reiterated on
Tuesday that it had not received any recent telephone call from
the United States on trade. Investor sentiment soured after the inversion in U.S.
Treasury yield curve deepened further and the benchmark 10-year
yields slipped, underscoring safe-haven demand and worries about
a softening global economy. US/
"There's a lot of concern about what's going on here and as
much as the investors try and ignore it and accept the idea that
the economy remains strong, the doubts seem to creep into this
market," said Rick Meckler, partner, Cherry Lane Investments.
"People are still concerned about the trade war with China
and the inconsistencies in a lot of the administration's
comments."
The interest-rate sensitive financials sector .SPSY slid
0.47%, weighing the most among all major S&P 500 sectors.
An escalation in the trade tensions between Washington and
Beijing has hit financial markets in the recent days after both
sides threatened to slap tariffs on each other's goods worth
billions of dollars.
Wall Street has been fretting over a deepening trade row
hurting corporate profits, worries of slowing global growth, and
the lack of clarity on the pace of U.S. rate cuts have only
added to the woes.
With the next Federal Reserve meeting scheduled for
September, investors are gauging the strength of the U.S.
economy for clues on where rates are headed.
The Dow Jones Industrial Average .DJI fell 2.76 points, or
0.01%, to 25,896.07, the S&P 500 .SPX gained 0.88 points, or
0.03%, to 2,879.26 and the Nasdaq Composite .IXIC dropped 2.82
points, or 0.04%, to 7,850.92.
Offering markets support was a 0.23% rise in the healthcare
sector .SPXHC , powered by gains in Johnson & Johnson JNJ.N .
Shares in the drugmaker rose 2.22% 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 Inc PM.N shares dropped 3.6%,
after the tobacco maker said it is in talks with Altria Group
Inc MO.N to combine in an all-stock merger of equals. Altria's
shares were off 1.1%.
Shares in J. M. Smucker Co SJM.N tumbled 9.3% after the
packaged food maker cut its full-year earnings forecast and
missed estimates for quarterly profit and sales. Declining issues outnumbered advancers for a 1.20-to-1 ratio
on the NYSE and a 1.82-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and 15 new lows,
while the Nasdaq recorded 33 new highs and 123 new lows.