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KB Home ( KBH ) falls after Q3 profit misses estimates

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Apple ( AAPL ) edges down as data shows China sales drop in Aug

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Ford, GM slide on Morgan Stanley downgrade

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Indexes: Dow down 0.63%, S&P 500 down 0.18%, Nasdaq up

0.03%

(Updates prices, details throughout)

By Echo Wang

Sept 25 (Reuters) -

The Dow Jones Industrial Average and S&P 500 edged lower on

Wednesday, pulling back from recent record highs spurred by

China's sweeping stimulus package, as investors awaited further

economic indicators and signals on upcoming interest rate cuts.

The three main indexes were set for monthly gains after the

Federal Reserve's rate cut on Sept. 18 boosted hopes of a soft

landing. However, a weak consumer sentiment report on Tuesday

raised concerns about the labor market health.

"What happened in commodities and basic materials, etc., was

quite a reaction to ... 'hey, what if China can get growing

again?' And that kind of feeds into other areas, (and) it helps

other economies," said Tom Martin, senior portfolio manager at

Globalt in Atlanta.

The long-term Treasury bond yield

ticked higher on worries that looser financial conditions could

reignite inflation.

Odds of a 50 basis point cut by the U.S. central bank at its

November meeting have risen to 57.4%, from a coin toss earlier

in the week, the CME Group's FedWatch Tool showed.

As of 2:52 p.m. ET, the Dow Jones Industrial Average

fell 265.40 points, or 0.63%, to 41,942.82, the S&P 500

lost 10.09 points, or 0.18%, at 5,722.84 and the Nasdaq

Composite gained 5.05 points, or 0.03%, at 18,079.57.

Seven out of the 11 S&P 500 sectors fell, led by energy

stocks. Tech stocks bucked the trend,

supported by Nvidia's ( NVDA ) 2.15% gain.

The blue-chip Dow dipped after reaching record highs,

weighed down by a 4.97% decline in Amgen ( AMGN ) after the

drugmaker reported mixed data on two drugs, sparking concerns

over increased competition.

The S&P 500 and the tech-heavy Nasdaq have risen about 20%

so far this year, driven by expectations of rate cuts and

optimism about artificial intelligence. However, the S&P 500 is

trading at valuations significantly above long-term averages.

"Valuations are fairly high right now, sentiment is

fairly high," Martin said, noting that caution is creeping in.

"It's hard to find bargains out there, because everything that

has gotten hit, a lot of it has come back, and the market has

broadened out."

Sales of new U.S. single-family homes fell in August, but

declining mortgage rates and house prices could stimulate demand

in the months ahead.

The main focus, however, will be on the weekly jobless

claims and the August U.S. personal consumption expenditure

(PCE) index, both set to be released later in the week.

Remarks from Fed Governor Adriana Kugler, expected after

markets close, will also be closely examined. But attention will

center on Fed Chair Jerome Powell's speech at the New York

Treasury Market Conference on Thursday.

Apple ( AAPL ) shares slipped 1.12%. Sales of

foreign-branded smartphones, including iPhones, in China fell in

August on an annual basis, data from a government-affiliated

research firm showed.

Citigroup ( C/PN ), Bank of America ( BAC ) and JPMorgan &

Chase ( JPM ) weighed on the broader bank index, which

was down 0.84%.

KB Home ( KBH ) fell 4.82% after posting a downbeat

third-quarter profit.

Hewlett Packard Enterprise ( HPE ) topped the S&P 500 with a

4.79% gain after Barclays' rating upgrade.

Ford lost 4.09% and General Motors ( GM ) fell 4.99%

to bottom the benchmark index after Morgan Stanley lowered its

recommendations on the automakers.

Declining issues outnumbered advancers by a 2.37-to-1

ratio on the NYSE. There were 345 new highs and 49 new lows on

the NYSE.

The S&P 500 posted 36 new 52-week highs and one new low

while the Nasdaq Composite recorded 63 new highs and 89 new

lows.