US stock indexes are mostly lower, extending a weak streak

Major U.S. stock indexes veered mostly lower in late-afternoon trading Tuesday, nudging the broader market closer toward a three-day losing streak.

Stocks were following a run of record highs last week with losses as investors weighed the odds that the Federal Reserve will cut interest rates at the end of the month.

The market rallied through much of June after the central bank signaled that it's prepared to cut interest rates to offset slowing global growth and the fallout from U.S. trade conflicts. But an unexpectedly strong U.S. jobs report Friday has dimmed investors' expectations that the Fed will cut its benchmark interest rate by as much as half a percentage point at its next meeting of policymakers.

Many traders still expect a cut of a quarter percentage point, but fewer are now expecting a half-point reduction.

"Certainly the jobs report put into perspective just how much easing may be possible, given the continued strength of the economy," said Justin Kelly, chief investment officer at Winslow Capital. "So the market is likely recalibrating."

Investors will be listening closely for any hints on the central bank's interest rate policy on Wednesday and Thursday, when Fed Chair Jerome Powell delivers the Fed's semi-annual monetary report to Congress.

Industrials, consumer staples and materials stocks took the heaviest losses. 3M slid 2.4%, Monster Beverage dropped 2.1% and Mosaic fell 3.1%.

The losses in those sectors were partially offset by gains in communications services and technology stocks. Facebook rose 1.6% and chipmaker Advanced Micro Devices climbed 3%.

Homebuilders fell as bond prices fell, lifting the yield on the 10-year Treasury note to 2.07% from 2.03% late Monday. When bond yields rise, they drive up interest rates on mortgages and other loans, making borrowing more expensive. Hovnanian Enterprises dropped 3.5%.

KEEPING SCORE: The S&P 500 was down less than 0.1% as of 3:38 p.m. Eastern time. The Dow Jones Industrial Average slid 66 points, or 0.3%, to 26,739. The Nasdaq composite, which his heavily weighted with technology companies, rose 0.4%, while the Russell 2000 index of smaller company stocks dropped 0.2%.

Major stock indexes in Europe finished lower.

EYE ON THE FED: The Fed's benchmark interest rate currently stands in a range of 2.25% to 2.5% and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.

On Friday, the Fed emphasized that it would act as necessary to sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates. The Fed's statement came in its semiannual report on monetary policy.

COMPANY REPORT CARDS: While investors are focused on any signals that might come out of the Fed this week, the market's pullback may also reflect prepositioning by traders as the bulk of S&P 500 companies report their second quarter results over the next few weeks, starting next week.

Expectations are generally low, and this could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings, according to FactSet.

"This is the quiet before the storm, the storm in this case being earnings season," Kelly said. "It's going to be a mixed earnings season because we can all observe the weaker macroeconomic data, which is going to affect companies that are more dependent on a strong economy."

Companies in the technology, health care and consumer discretionary sectors are likely to deliver stronger results, given that U.S. consumer spending and sentiment remain strong.

"You may be starting to see investors position for that, believing that earnings may be positive catalyst for the share prices in those growth sectors," Kelly said.

TECH BUYOUT: Acacia Communications jumped 34.9% after the company agreed to be acquired by Cisco Systems.

APPETIZING DEALS: TreeHouse Foods rose 1% after the company said it has reached a deal to sell its snack division to Atlas Holdings for $90 million.

MIXED REPORT: Shares in PepsiCo fell 1% after the beverage maker said it has had to raise prices as customers move to smaller serving sizes. That overshadowed the company's latest quarterly results, which beat profit and revenue expectations.