Stocks fell from record highs on Tuesday after President Donald Trump cast doubt on the trade progress between China and the U.S.
The Dow Jones Industrial Average slipped 23.53 points, or 0.1%, to 27,335.63, ending a four-day winning streak. The S&P 500 closed 0.3% lower at 3,004.04 and snapped a five-day winning streak. The Nasdaq Composite fell 0.4% to 8,222.80. The averages had notched all-time closing highs in the previous session.
Trump said the two countries have a "long way to go" on trade, adding the U.S. can slap tariffs on an additional $325 billion worth of Chinese goods "if we want."
Trump's comments come after China and the U.S. agreed not to ratchet up trade tensions in an effort to restart negotiations. China and the U.S. have slapped tariffs on billions of dollars worth of each other's imports since last year. The ongoing trade war has sparked fear of slower economic growth around the world. They also come as the U.S. corporate earnings season kicks into full gear.
"Looking at this earnings season, the key question is: Will trade uncertainty cause businesses to pullback on spending and investment enough so that it begins to weigh on earnings?" said Tom Essaye, founder of the Sevens Report, in a note. "If there is evidence that businesses beyond China-focused industrials also are starting to become more conservative, then that will be a big negative for future earnings."
Goldman Sachs reported better-than-expected results, driven by the company's investment banking and trading divisions. Goldman shares rose 1.9%.
J.P. Morgan Chase 's results also topped estimates and its stock rose 1.1%. Johnson & Johnson, however, fell 1.6% despite reporting a 42% profit surge in the previous quarter.
So far, just over 5% of S&P 500 companies have reported calendar second-quarter earnings, according to FactSet. Of those companies, more than 85% have posted better-than-expected earnings.
Investors will welcome the strong start to the earnings season since the outlook for corporate profits remains bleak. Analysts expect S&P 500 earnings to have fallen by 3% in the second quarter, according to FactSet data.
"It seems like expectations are fairly low, or at the very least checkered heading into earnings season as we are," said Thorne Perkin, president at Papamarkou Wellner Asset Management. "The stock trajectory of some the companies that have already reported generally shows investors are going to be forgiving."
"You saw this when ConAgra reported. You saw this when General Mills reported. You saw this when Broadcom reported. Those were all underwhelming numbers. They went down initially but have since snapped back and traded up," Perkin said. "This suggests to me that traders are understanding of the economic and trade issues that are plaguing these companies."
—CNBC's Elliot Smith contributed to this report.