Top Stories
Top Stories
Wires

US STOCKS-Wall St drops as investors await outcome of U.S.-China trade talks

* U.S., China trade negotiators to meet at 5 p.m. ET

Technology leads declines among S&P sectors

* Tapestry gains after quarterly profit beat

* Indexes down: Dow 0.83%, S&P 0.60%, Nasdaq 0.76% (Updates to late afternoon, changes byline, adds NEW YORK to dateline)

By April Joyner

NEW YORK, May 9 (Reuters) - Wall Street's main indexes fell on Thursday ahead of critical trade negotiations between the United States and China, though they pared losses significantly after U.S. President Donald Trump said reaching a deal this week was possible.

U.S. stocks had fallen more than 1% earlier in the session but recovered much of those losses after Trump said he had received a "beautiful letter" from Chinese President Xi Jinping. Negotiators will meet at 5 p.m. Eastern (2100 GMT) on Thursday, Trump said. They are set to continue talks through Friday.

Still, the United States has not backed down from hiking tariffs on $200 billion worth of Chinese goods to 25% on Friday. Trump also said that paperwork had been initiated to levy 25% tariffs on a further $325 billion worth of Chinese imports.

Though investors remained cautious about the outcome of the trade talks, taking too much of a pessimistic stance could also pose a risk given the mixed tone of Trump's comments, said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. Such uncertainty may have helped cap Thursday's declines in stocks, he said.

"The problem the market faces is, 'Do you want to go short into that unknown?"' Cox said. "They could regret the choice to sell into what could be a deal."

The Dow Jones Industrial Average fell 216.18 points, or 0.83%, to 25,751.15, the S&P 500 lost 17.4 points, or 0.60%, to 2,862.02 and the Nasdaq Composite dropped 60.01 points, or 0.76%, to 7,883.31.

The S&P 500 index briefly slipped below its 50-day moving average, a closely watched level of momentum, during the session but moved back above that level as it pared losses.

Technology stocks posted the steepest declines among S&P sectors, slipping 1.2%, dragged down by a drop in shares of iPhone maker Apple Inc and chipmakers, which get a large portion of their revenue from China.

Apple shares fell 1.8%.

The Philadelphia semiconductor index, which was also pressured by an underwhelming profit growth forecast from Intel Corp, declined 1.7%. The index has fallen 6.2% so far this week and is on pace to post its biggest percentage weekly loss since December.

Trade-sensitive industrial bellwethers were also hit, with shares of Boeing Co, Caterpillar Inc and 3M Co all down 1% or more.

The CBOE Volatility Index, a gauge of investor anxiety, rose for the fourth consecutive session and is at its highest level in more than three months.

In a bright spot, Tapestry Inc shares jumped 7.8%, the most among S&P companies, after the Coach handbag maker beat quarterly profit estimates and announced a $1 billion share buyback plan.

Chevron Corp shares climbed 2.6%, providing the biggest boost to the Dow and the S&P 500, after the oil company said it would not raise its $33 billion offer to buy Anadarko Petroleum Corp.

Declining issues outnumbered advancing ones on the NYSE by a 1.76-to-1 ratio; on Nasdaq, a 1.80-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and 11 new lows; the Nasdaq Composite recorded 33 new highs and 92 new lows. (Reporting by April Joyner; Additional reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila, Anil D'Silva and Susan Thomas)