By Paul J. Davies and Gunjan Banerji
U.S. stocks slipped after a set of mixed second-quarter earnings reports from three major banks.
The S&P 500 fell about 12 points, or 0.4%. The Dow Jones Industrial Average lost 64 points, or 0.2%. The Nasdaq Composite slipped 0.6%.
Stocks have risen to records recently, and investors are watching U.S. corporate earnings releases for clues on how companies are handling tepid economic growth and trade tensions between the U.S. and China.
"We're moving from a hope-based market, which got us over 3000 [in the S&P 500]....to more the 'show me' market," said Brad McMillan, chief investment officer for Commonwealth Financial Network.
Wells Fargo lost 2.4% after it reported that profit rose, but it had to pay more to depositors looking for higher rates in the quarter. Goldman Sachs reported a fall in quarterly profit versus last year, but lifted its dividend. Its stock rose 0.6% in recent trading. JPMorgan Chase posted revenue in line with expectations for the second quarter and its shares gained 0.4%.
Shares of Johnson & Johnson dragged down the Dow. The company said earnings per share rose 43% versus the same period last year but its shares fell 1.3%.
U.S. Treasury yields and the dollar notched gains after retail sales data showed that American shoppers increased their spending in June. The WSJ Dollar Index added 0.3%.
The yield on the 10-year Treasury note rose to 2.124% in recent trading, according to Tradeweb, from 2.092% on Monday, after fresh data showed that prices for foreign-made goods imported to the U.S. fell sharply in June. It was the latest sign that inflation pressures are tame. Yields rise as bond prices fall.
Elsewhere, the British pound fell to its lowest level against the dollar in two years after a debate between the U.K.'s leadership candidates appeared to raise fears of an abrupt Brexit.
Sterling dropped 0.6% against the dollar to $1.24, its lowest since April 2017. It fell 0.3% versus the euro to EUR1.11 after Boris Johnson and Jeremy Hunt, the two candidates vying to take over from departing Theresa May, both said Monday evening they wouldn't accept the so-called Irish backstop previously agreed with the European Union as part of the long negotiations over Brexit.
Their stance was likely to set up a clash with European leaders and may make for an abrupt exit without any agreement on Britain's future relationship with the bloc.
"This story confirms both candidates have set themselves a self-defeating high bar for talks with the EU," said Jordan Rochester, global FX strategist at Nomura in London.
Write to Paul J. Davies at firstname.lastname@example.org and Gunjan Banerji at Gunjan.Banerji@wsj.com