U.S. stocks searched for direction in early trading after China increased interest rates and European markets dropped on a downgrading of Portugal's debt.
The Dow Jones Industrial Average edged up eight points, or 0.1%, to 12580, while the Standard & Poor's 500-stock index slipped two points, or 0.1%, to 1336 and the Nasdaq Composite was down one point, or 0.1%, at 2824. The Dow and S&P slipped Tuesday to halt their respective win streaks at five sessions, the longest since February.
European markets were mostly lower, with the Stoxx Europe 600 headed for its first loss in eight sessions, after Moody's Investors Service cut Portugal's credit rating to "junk" status late Tuesday. Asian bourses, which closed before China's central bank lifted its benchmark deposit and lending rates by 0.25 percentage point, were mixed.
The U.S. markets' declines were led by financial stocks, after shares in Portuguese and Spanish banks tumbled on the Moody's downgrade of Portugal's sovereign-debt rating to junk. Bank of America led the Dow's laggards, falling 2.1%. J.P. Morgan Chase fell 1.3% and Wells Fargo shed 1.7%.
Pulling on the upside were industrial stocks, with Caterpillar and Boeing up 0.7% and 0.5% respectively.
On the economic front, the Institute of Supply Management will release its non-manufacturing purchasing manager's index for June at 10 a.m. ET. Investors will be looking ahead, however, to key readings on the labor market later this week, starting with Automatic Data Processing's jobs survey and initial weekly claims for jobless benefits on Thursday and capped by the government's monthly employment report on Friday.
Crude oil futures edged above $97 a barrel. Gold futures were also slightly higher to about $1,528 an ounce. The U.S. dollar gained strongly against the euro, but lost ground to the yen. Treasurys gained, pushing the yield on the benchmark 10-year note down to 3.1038%.
In corporate news, a group including Warren Buffett's Berkshire Hathaway is in exclusive talks to buy Citigroup's consumer-lending business, formerly known as CitiFinancial, according to a report in the Wall Street Journal. Citigroup shares slipped 0.9%.
Walgreen gained 1.1% after same-store sales at the drugstore chain rose 4.8% in June, well above analysts' estimates, led by strong growth in the front of the store and pharmacy segments. In the front of the store, Walgreen said same-store sales increased 4.7% last month, above analysts' views for 2.2% growth.
Visa, meantime, was off 0.3% ahead of a business update webcast for investors after markets close.
