NEW YORK, Oct 7 (Reuters) - U.S. stocks retreated from all-time highs in choppy trading on Tuesday as investors, deprived of economic data resulting from the shuttered government, looked to secondary indicators and remarks from U.S. Federal Reserve officials for clues regarding economic weakness and monetary policy.
All three indexes turned negative after a consumer expectations survey from the New York Federal Reserve showed deteriorating future expectations and rising inflation projections. The report garnered increased scrutiny amid a federal data blackout resulting from a partisan congressional impasse that extended the government shutdown to its seventh day.
Investors have had to rely on secondary, independently produced data, along with remarks from monetary policymakers, to gauge the likelihood that the Federal Reserve will implement its second rate cut of the year at this month's policy meeting.
Economically sensitive sectors, including homebuilding (.SPCOMHOME), housing (.HGX), airlines (.SPCOMAIR), and transport (.DJT), underperformed the broader market.
"The market is still very much centered on AI driving everything, and I think some of the bloom is off the rose and some investors are taking some profits," said Paul Nolte, senior wealth adviser & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "When you look underneath the hood, the market has not really been all that healthy. The laggards are still the laggards and now they're leading the downside."
Fed Governor Stephen Miran stated his case for continued rate cuts, stressing the risks of keeping policy too restrictive.
The Dow Jones Industrial Average (.DJI), fell 157.11 points, or 0.34%, to 46,537.86, the S&P 500 (.SPX), lost 28.30 points, or 0.42%, to 6,711.82 and the Nasdaq Composite (.IXIC), lost 145.58 points, or 0.64%, to 22,795.41.
Among the 11 major sectors of the S&P 500, consumer discretionary (.SPLRCD), suffered the steepest percentage decline, while consumer staples (.SPLRCS), and utilities (.SPLRCU), were the only gainers.
Tesla (TSLA.O), shares extended their losses, dropping 2.2% after the electric carmaker unveiled its low-cost Model Y.
AMD (AMD.O), gained 3.6% after Jefferies upgraded the stock rating to "buy" and other brokerages hiked their price targets the day after the chipmaker's supply deal with OpenAI bolstered the tech rally.
Corona beer maker Constellation Brands (STZ.N), gained 1.1% after posting a smaller-than-expected drop in second-quarter sales.
IBM (IBM.N), advanced 1.8% after the company announced a partnership with AI startup Anthropic.
U.S.-listed shares of Trilogy Metals soared 235.7% after the White House said it would acquire a 10% stake in the company.
AppLovin (APP.O), surged 8.7%, recouping nearly half of its losses from the prior session, and topped the S&P 500 after brokerages Citi Research and Oppenheimer allayed concerns after a report on a U.S. Securities and Exchange Commission probe into its data collection practices.
Bitcoin-related stocks, including Coinbase (COIN.O), Strategy (MSTR.O), Riot Platforms (RIOT.O), and MARA Holdings (MARA.O), reversed Monday's gains as the cryptocurrency backed away from record highs. The stocks were off between 2.2% and 8%.
Declining issues outnumbered advancers by a 2.05-to-1 ratio on the NYSE. There were 308 new highs and 64 new lows on the NYSE.
On the Nasdaq, 1,416 stocks rose and 3,176 fell as declining issues outnumbered advancers by a 2.24-to-1 ratio.
The S&P 500 posted 35 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 116 new highs and 59 new lows.
Reporting by Stephen Culp; Additional reporting by Niket Nishant and Sukriti Gupta in Bengaluru Editing by Rod Nickel
