(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

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Indexes down: Dow 0.17%, S&P 500 0.33%, Nasdaq 0.36%

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Solar stocks down as Senate proposes to phase out tax

credits

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Eli Lilly ( LLY ) to acquire Verve Therapeutics ( VERV ) for up to $1.3 bln

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Retail sales post biggest drop in four months in May

(Updates with afternoon trading levels)

By Kanchana Chakravarty and Sukriti Gupta

June 17 (Reuters) - Wall Street indexes edged lower on

Tuesday as the Israel-Iran conflict entered its fifth day,

weighing on investor confidence ahead of the Federal Reserve's

upcoming monetary policy decision.

Iran and Israel's air war, which began on Friday when Israel

attacked Iran's nuclear facilities, has raised concerns that the

conflict could create bottlenecks for oil exports from the

oil-rich Middle East.

U.S. energy stocks rose as oil prices remained elevated on

the uncertainty. Chevron ( CVX ) was up 2.1% and Exxon

advanced 1.5%.

The surge in oil prices comes ahead of the Fed's monetary

policy decision on Wednesday, when policymakers are widely

expected to keep interest rates unchanged.

Money market moves show traders are pricing in about 46

basis points of rate cuts by the end of 2025, with a 55% chance

of a 25-bps rate cut in September, according to CME Group's

FedWatch tool.

"With price hikes likely on the way due to the tariffs, we

think that officials will be reluctant to sound too dovish at

this junction, either in the communications or the dot plot,"

Matthew Ryan, head of market strategy at Ebury, said in an

emailed note.

At 11:26 a.m. ET, the Dow Jones Industrial Average

fell 71.08 points, or 0.17%, to 42,444.01, the S&P 500

lost 19.72 points, or 0.33%, to 6,013.39 and the Nasdaq

Composite lost 70.66 points, or 0.36%, to 19,630.55.

Ten of the 11 major S&P 500 sub-sectors fell. Healthcare

stocks dropped the most, with a nearly 1% decline. On

the flip side, energy stocks gained 1.2%.

Data on Tuesday showed U.S. retail sales dropped more than

expected in May, while factory production barely rose last

month.

U.S. Senate Republicans late on Monday unveiled proposed

changes to President Donald Trump's sweeping tax-cut bill that

had cleared the House of Representatives in May.

Solar stocks dipped after the Senate's changes to Trump's

tax-cut bill revealed a phase-out of solar, wind and energy tax

credits by 2028.

Shares of Enphase Energy ( ENPH ) dropped 23.7% and Sunrun ( RUN )

fell 41%. Invesco Solar ETF was down 8.9%.

As investors flock to traditional safe-haven assets amid

heightened geopolitical uncertainty, a rise in U.S. Treasuries

pushed yields lower across the curve. Yields on the benchmark

10-year fell about 3 basis points to 4.42%.

Among megacap stocks, Tesla lost 2.8%.

Eli Lilly ( LLY ) fell 1.5% after it agreed to acquire Verve

Therapeutics ( VERV ) for up to $1.3 billion. Shares of Verve

surged 76.5%.

T-Mobile fell 3.9% as Japan's SoftBank

raised $4.8 billion from a sale of 21.5 million of the wireless

carrier's shares at $224 each, according to a term sheet

reviewed by Reuters.

Declining issues outnumbered advancers by a 1.43-to-1 ratio

on the NYSE and by a 1.5-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and lows

each, while the Nasdaq Composite recorded 43 new highs and 65

new lows.