Investing.com – Despite opening in positive territory with both the S&P 500 and Nasdaq Composite hitting fresh all-time highs on Tuesday, Wall Street pulled an about face in early morning trade and showed caution nearing midday as investors kept an eye developments in the political arena.
At 11:35AM ET (15:33GMT), the Dow Jones slipped 13 points, or 0.06%, the S&P 500 lost 3 points, or 0.12%, while the Nasdaq Composite inched up 2 points, or 0.03%.
Hanging over U.S. markets were concerns over the ramification of reports that U.S. President Donald Trump disclosed highly classified information to Russia's foreign minister about a planned Islamic State operation in a meeting last week.
The news added to concerns that Trump will be unable to successfully push through his economic stimulus program as yet another controversy could add to distractions to approve promised tax reforms among other policies.
Concern over economic policies also pummeled the dollar on Tuesday. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, weakened for a fifth straight day on Tuesday, hitting fresh six-month lows as markets also began to cut odds for the Federal Reserve (Fed) to hike rates in June.
According to Investing.com’s Fed Rate Monitor Tool, Fed fund futures priced in around a 71% chance of an increase on Tuesday, compared to more than 80% last week.
Investors also digested some disappointing news from the housing market as both housing starts and building permits unexpectedly tumbled in April.
However, not all of the economic data from the start of the second quarter was negative, as industrial production increased by more than double the consensus forecast.
On the earnings front, Home Depot (NYSE:HD) led advancers on the Dow with gains of more than 1% after the blue-chip home improvement retailer managed to beat consensus on both the top and bottom line.
Still, amid other retailers reporting earnings Tuesday, Staples (NASDAQ:SPLS) and TJX Companies (NYSE:TJX) missed on sales estimates and saw shares sink 5% and 4%, respectively.
Urban Outfitters (NASDAQ:URBN) will report its numbers after the close.
Meanwhile, oil prices edged higher on Tuesday, extending gains from the prior session when Saudi Arabia and Russia agreed to extend oil output cuts for a further nine months until March 2018.
Yet, market participants were cautious as they looked ahead to weekly data from the U.S. on stockpiles of crude and refined products. Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (20:30GMT) later on Tuesday.
U.S. crude futures gained 0.12% to $48.91 by 11:36AM ET (15:36GMT), while Brent oil rose 0.15% to $51.90.