NEW YORK, Sept 10 (Reuters) - U.S. stocks struggled to extend gains and crude prices dipped as concerns over softening global demand held risk appetite in check ahead of key inflation data expected on Wednesday.
Market participants were girding themselves for the Labor Department's closely watched consumer price index (CPI) report, and the first debate between Vice President Kamala Harris and former President Donald Trump, who are locked in a tight race for the White House.
Data from China showing a spike in exports appeared to be in anticipation of tighter tariffs from its trading partners, including the incoming U.S. administration.
Megacap tech and tech-related stocks helped boost the Nasdaq into positive territory, while the S&P 500 eked out a more meager gain and the blue-chip Dow languished in the red.
Shares of big banks were under pressure after Federal Reserve Vice Chair for Supervision Michael Barr unveiled sweeping bank capital plan revisions.
Between now and third-quarter earnings season "you're probably more likely to have a sideways to slightly negative trending market," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. "September tends to be seasonally tough, there's an absence of major news to drive stocks higher right now, and given the returns that we've already achieved year to date."
Wednesday's CPI report is expected to show inflation continues to drift closer to the U.S. Federal Reserve's 2% target, reflecting Fed Chair Jerome Powell's belief that price growth is now under control, and softness in the labor market suggests the time has come for a policy rate cut.
Financial markets are currently baking in a 71% likelihood that the central bank will cut its Fed funds target rate by 25 basis points at the conclusion of its monetary policy meeting next week, with a 31% chance of a supersized 50 basis point rate cut, according to CME's FedWatch tool.
"Investors are firmly focused on what the Fed is going to do, and on economic reports," Pursche added. "So far, the data indicates that the most likely scenario is a soft landing or very mild recession."
The Dow Jones Industrial Average (.DJI), fell 111.37 points, or 0.27%, to 40,718.22; the S&P 500 (.SPX), gained 8.18 points, or 0.15%, to 5,479.23; and the Nasdaq Composite (.IXIC), added 48.77 points, or 0.29%, to 16,933.37.
European stocks turned negative shortly before Wall Street's opening bell.
The pan-European STOXX 600 index (.STOXX), lost 0.54% and MSCI's gauge of stocks across the globe (.MIWD00000PUS), shed 0.08%.
Emerging market stocks lost 0.06%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), closed 0.05% higher, while Japan's Nikkei (.N225), lost 0.16%.
U.S. Treasury yields edged lower ahead of the U.S. presidential debate and Wednesday's CPI report, which could cause investors to adjust expectations regarding the size of the Fed's first interest rate cut.
Benchmark 10-year notes last rose 8/32 in price to yield 3.6685%, down from 3.699% late on Friday.
The 30-year bond last rose 15/32 in price to yield 3.9726%, down from 3.999% late on Friday.
The dollar inched higher against a basket of world currencies in advance of the CPI data and the presidential debate.
The dollar index (.DXY), rose 0.18%, with the euro down 0.14% to $1.1019.
The Japanese yen strengthened 0.37% versus the greenback at 142.67 per dollar, while Sterling was last trading at $1.3059, down 0.10% on the day.
Oil prices slid as worries over dampening global demand offset potential U.S. supply concerns due to Tropical Storm Francine.
U.S. crude fell 3.41% to $66.37 per barrel and Brent was last at $69.53, down 3.22% on the day.
Gold firmed above the $2,500 level as investors positioned themselves ahead of the CPI report.
Spot gold added 0.2% to $2,511.08 an ounce.
Reporting by Stephen Culp; Additional reporting by Amanda Cooper in London; Editing by Jonathan Oatis
