Wall Street takes a breather after trade-fueled rally

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By Arjun Panchadar

(Reuters) – U.S. stocks took a breather on Tuesday, weighed down partially by losses in healthcare stocks, after a rally driven by hopes of a trade truce between Washington and Beijing propelled the three main indexes to record highs a day earlier.

The benchmark S&P 500 and Nasdaq indexes have risen in seven of the past 10 sessions. The healthcare sector () shed 0.71% while technology stocks () slipped 0.3% after two days of gains.

China is pushing President Donald Trump to remove more tariffs as part of the “phase one” deal, which may be signed this month, according to the latest reports.

The Institute for Supply Management services report on Tuesday on non-manufacturing activity showed a reading of 54.7 in October from 52.6 in September, and above expectations of 53.4, according to economists polled by Reuters, allaying concerns of a slowdown in the domestic economy.

Wall Street’s rally this month has been bolstered by hopes of a resolution to the trade war, along with a largely better-than-expected third-quarter earnings season and an upbeat October jobs report.

Six of the 11 major S&P 500 sectors were lower, with real estate leading declines. The energy sector () climbed 0.5%, as oil prices rose.

“The main focus is to get this phase one trade deal, which could happen this month,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:) in Austin, Texas. “I do think the market can hold its ground until we get some sort of a deal signed.”

The S&P 500 and the Nasdaq closed at record highs for the second consecutive session on Monday, while the Dow Jones hit a record high for the first time since July.

Over three-quarters of the S&P 500 companies that have reported results so far have beaten profit expectations, Refinitiv data showed.

“The lion’s share of the numbers have come in already and we have had enough reports to suggest that this was a solid earnings season,” Frederick said.

At 10:31 a.m. ET the Dow Jones Industrial Average () was up 23.02 points, or 0.08%, at 27,485.13, the S&P 500 () was down 3.67 points, or 0.12%, at 3,074.60 and the Nasdaq Composite () was down 3.15 points, or 0.04%, at 8,430.06.

A 2% rise in Boeing Co’s (N:) shares kept the Dow Jones index in positive territory after Chairman Dave Calhoun said Boeing’s board believed Chief Executive Officer Dennis Muilenburg “has done everything right” in the midst of two fatal crashes involving the company’s 737 MAX jet.

Shares of Tapestry Inc (N:) reversed course to fall 4.45% after the Coach handbag maker forecast second-quarter profit below expectations.

Adobe Inc (O:) rose 3% as the Photoshop software maker raised its fourth-quarter digital media annualized recurring revenue target, boosting the Nasdaq and S&P 500.

Xerox Holdings Corp (N:) gained 5% after the photocopier maker said it would sell its 25% stake in Fuji Xerox, its joint venture with Fujifilm Holdings (T:), for $2.3 billion.

Uber Technologies Inc (N:) fell 7% after the ride-hailing service posted a bigger third-quarter loss as it tried to outspend competitors through discounts.

Advancing issues outnumbered decliners by a 1.06-to-1 ratio on the NYSE and a 1.22-to-1 ratio on the Nasdaq.

The S&P index recorded 56 new 52-week highs and no new lows, while the Nasdaq recorded 122 new highs and 24 new lows.