US STOCKS-Wall Street slips as financials drag, trade outlook clouds

* U.S. yield curve inversion deepens; financials fall
* J&J up after opioid lawsuit decision
* Dow down 0.48%, S&P 500 down 0.33%, Nasdaq down 0.34%

(Updates to market close)
By Chuck Mikolajczak
NEW YORK, Aug 27 (Reuters) - Wall Street slipped on Tuesday,
weighed down by financial stocks as a deepening of the Treasury
yield curve inversion raised U.S. recession worries and
uncertainty over any progress in trade negotiations between the
United States and China took a toll.
U.S. stocks initially advanced, building on Monday's bounce,
as President Donald Trump forecast 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. A deepening of the inversion in the yield curve between the
2-year and 10-year U.S. Treasuries US2US10=RR underscored
worries about a weakening global economy. "It is going to be pretty confusing and unfortunately,
without some kind of a major backpedaling on trade, to maybe
slow things down and push things out, the economy is going to
suffer," said Jack Ablin, chief investment officer at Cresset
Capital Management in Chicago.
The Dow Jones Industrial Average .DJI fell 124.66 points,
or 0.48%, to 25,774.17, the S&P 500 .SPX lost 9.53 points, or
0.33%, to 2,868.85, and the Nasdaq Composite .IXIC dropped
26.79 points, or 0.34%, to 7,826.95.
Financial shares .SPSY , which tend to weaken in lower-rate
and soft economic environments, lost 0.72%, while the defensive
utilities .SPLRCU sector led advancing groups, edging up
0.14%.
The S&P 500 has lost nearly 4% in August on worries over the
impact of the intensifying U.S.-China trade war 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. The release next
week of the government's closely watched monthly jobs report and
manufacturing data will give investors factors to consider
before the policy announcement.
Among individual stocks, Johnson & Johnson JNJ.N shares
rose 1.44% after an Oklahoma judge said the drugmaker 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 7.76% 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 3.95%. Shares of J. M. Smucker Co SJM.N tumbled 8.18% 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
1.71-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favored decliners.
The S&P 500 posted 29 new 52-week highs and 36 new lows; the
Nasdaq Composite recorded 38 new highs and 210 new lows.
About 6.29 billion shares changed hands in U.S. exchanges,
compared with the 7.57 billion daily average over the last 20
sessions.