(Reuters) – U.S. stocks treaded water on Tuesday, pressured by worries of a euro zone breakup after anti-euro comments from an Italian lawmaker.
Italy would enjoy more favorable economic conditions outside of the euro zone, said Claudio Borghi, a euroskeptic who chairs the budget committee of the lower house of parliament. That sparked a selloff in Italian banks and pressured world stocks.
“Clearly a headwind coming into the day was European markets being soft… early trade is more driven by what’s going on in the overall markets,” said Art Hogan, chief market strategist at B. Riley FBR in New York.
“Banks and bluechip stocks in general are off a bit and that’s a little bit of a pressure point,” Hogan said.
Eight of the 11 major S&P sectors were lower, led by a 0.57 percent drop in financial .SPSY stocks as U.S. lenders such as Bank of America (BAC.N) and Citigroup (C.N) and Wells Fargo (WFC.N) followed their Italian peers lower.
That was ahead of a speech by Federal Reserve Chairman Jerome Powell at 12:45 p.m ET and Fed Vice Chair for Supervision Randal Quarles testifying before the Senate Banking Committee on banking regulation.
The defensive utilities .SPLRCU sector was the top gainer, rising more than 1 percent.
Facebook (FB.O) dropped 1 percent, but the impact was blunted by gains in technology stocks, especially a continuing rally in chipmakers.
At 10:08 a.m. EDT, the Dow Jones Industrial Average .DJI was up 15.03 points, or 0.06 percent, at 26,666.24, the S&P 500 .SPX was down 1.51 points, or 0.05 percent, at 2,923.08 and the Nasdaq Composite .IXIC was down 9.82 points, or 0.12 percent, at 8,027.48.
PepsiCo (PEP.O) fell 1.7 percent as weaker-than-expected margins overshadowed a quarterly profit that beat estimates.
U.S. Steel Corp (X.N) fell 3.8 percent after Deutsche Bank downgraded the stock on concerns around free cash flow generation and operational inconsistencies.
Declining issues outnumbered advancers for a 1.11-to-1 ratio on the NYSE and a 1.50-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and seven new lows, while the Nasdaq recorded 18 new highs and 56 new lows.
Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila