By Bansari Mayur Kamdar and Johann M Cherian
(Reuters) - Wall Street's main indexes fell on Wednesday ahead of the Federal Reserve's June meeting minutes, while weak U.S. and China economic data as well as rising Sino-U.S. tensions dented investor sentiment.
May U.S. factory orders rose less than expected, according to a Commerce Department report, fanning fears of a slowdown due to high interest rates after data on Monday showed manufacturing slumped further last month.
Investors are focused on the Fed minutes, expected to be released around 2 p.m. ET, for clues on the central bank's monetary policy path.
More economic data, including the non-farm payrolls, is scheduled for release later this week that could help determine the Fed's rate trajectory.
Bets for a 25-basis-point rate increase in July stood at 88.7%, while traders have priced in just a 17.7% chance the central bank would deliver another hike in September, according to CME's Fedwatch tool.
"Chairman Powell has mentioned that there is a bit of a tug of war at the Fed between those who are more dovish versus the more hawkish faction of the Federal Open Market Committee," said Quincy Krosby, chief global strategist for LPL Financial (NASDAQ:LPLA).
"So the question has always been why did they choose that (June) meeting to skip rate hikes, because it was the first break in a nonstop campaign of raising rates."
Chip stocks Intel (NASDAQ:INTC) and Micron Technology (NASDAQ:MU) fell 2% each after China said it would control exports of some metals widely used in the semiconductor industry as tensions between Beijing and Washington rise over access to high-tech microchips.
The Philadelphia SE Semiconductor Index lost 1.4%.
After a sharp AI-fueled rally in the first half of the year, Wall Street kicked off the new quarter with slim gains in a holiday-shortened session on Monday, led by Tesla (NASDAQ:TSLA) after the electric-vehicle company posted record second-quarter deliveries.
At 11:46 a.m. ET, the Dow Jones Industrial Average was down 56.47 points, or 0.16%, at 34,362.00, the S&P 500 was down 2.44 points, or 0.05%, at 4,453.15, and the Nasdaq Composite was down 9.20 points, or 0.07%, at 13,807.58.
Eight of the 11 major S&P 500 sectors declined by mid-day. Material shares led losses, down 2.0%.
Meta Platforms rose 3.4%, outpacing its megacap tech and growth peers, ahead of the expected release of its Twitter-rival app, Threads, on Thursday.
"Investors can't help but be a little excited about the prospect that Meta really has a "Twitter-Killer" poised to launch on the app store," said Danni Hewson, head of financial analysis at AJ Bell.
United Parcel Service (NYSE:UPS) slid 1.5% after the Teamsters Union and the postal service operator accused each other of walking away from negotiations over a new contract.
Moderna (NASDAQ:MRNA) rose 3% after the drugmaker signed an agreement to work towards opportunities to research, develop and manufacture mRNA medicines in China.
General Motors (NYSE:GM) added 1.1% after the car maker reported upbeat second-quarter U.S. auto sales, helped by easing supply chain pressures.
Declining issues outnumbered advancers by a 1.64-to-1 ratio on the NYSE and a 1.74-to-1 ratio on the Nasdaq.
The S&P index recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 37 new highs and 45 new lows.