*

Caterpillar ( CAT ) profit falls on weak equipment demand, tariff

hit

*

July's ISM nonmanufacturing PMI slipped to 50.1

(Updates to close)

By Caroline Valetkevitch

NEW YORK, Aug 5 (Reuters) - U.S. stocks ended lower on

Tuesday as investors weighed the impact of tariffs after Yum

Brands ( YUM ) and other companies cited trade duties in their

results or outlooks.

In addition, U.S. President Donald Trump said the U.S. could

impose a "small tariff" on pharmaceutical imports before

increasing the rate subsequently. He also signaled an

announcement on tariffs on semiconductors and chips in the "next

week or so."

Shares of KFC ( YUM ) parent Yum Brands ( YUM ) fell after the

company missed estimates for the second quarter, as steep trade

duties restricted consumer spending.

Caterpillar ( CAT ) warned of an up to $1.5 billion hit in

2025.

The results come at the tail end of the U.S. reporting

period for the second quarter.

"If you look at results, they are trending above low-bar

expectations," said Terry Sandven, chief equity strategist at

U.S. Bank Wealth Management in Minneapolis, Minnesota.

"The impact of tariffs remains a work in progress. We're not

seeing any meaningful impact on company profitability with

tariffs. We do know, however, that they loom."

According to preliminary data, the S&P 500

lost 30.75 points, or 0.49%, to end at 6,299.19 points,

while the Nasdaq Composite lost 136.92 points, or 0.65%,

to 20,916.66. The Dow Jones Industrial Average fell 61.56

points, or 0.14%, to 44,112.08.

Earlier in the day, data showed ISM's nonmanufacturing

purchasing managers index (PMI) slipped to 50.1 last month from

50.8 in June, as little changes in orders and weaker hiring,

alongside rising input costs.

"Today's market action reflects investors that are merely in

pause mode," Sandven said.

While the backdrop for equities remains constructive for the

year, "clearly near-term there are some headwinds," he said,

including elevated valuations given recent record highs in the

S&P 500.

In other company news, Marriott International ( MAR ) cut

its annual forecast on slowing travel demand.

Stocks sold off on Friday after a disappointing July jobs

data and sharp downward revisions to prior months, but indexes

bounced back on Monday.

(Additional reporting by Nikhil Sharma and Pranav Kashyap in

Bengaluru; Additional reporting by Twesha Dikshit; Editing by

Maju Samuel and Aurora Ellis)