By Medha Singh and Devik Jain
Aug 25 (Reuters) - The S&P 500 was little changed on Tuesday with investors staying on the sidelines following a three-day rally, as optimism from U.S. and China officials pledging firm commitment to a Phase 1 trade deal petered out.
The benchmark S&P 500 opened at a record high as the news eased some concerns the deal could be on shaky ground, but the sentiment soon faded as China said it had lodged "stern representations" with the United States, accusing it of sending a U.S. spy plane into a no-fly zone over Chinese live-fire military drills.
"There is beginning to be more and more tension between the two biggest economies in the world," said John Cunnison, chief investment officer of Baker Boyer in Washington.
The S&P 500 and Nasdaq logged new closing highs on Monday, boosted by signs of progress in developing treatments and vaccines for COVID-19.
The benchmark index surpassed its pre-pandemic high last week, even as recent economic indicators signaled a bumpy recovery from the virus-induced downturn.
A survey from the Conference Board showed U.S. consumer confidence unexpectedly fell in August to a six-year low.
The centerpiece event of the week is an annual conference of U.S. central bankers where Federal Reserve Chairman Jerome Powell is scheduled to speak.
Among stocks, Salesforce.com Inc CRM.N, Amgen Inc AMGN.O and Honeywell International Inc HON.N rose between 3.3% and 5.5% on news they would join the blue-chip Dow Jones Industrial Average index on Aug. 31.
Cloud computing heavyweight Salesforce is expected to report second-quarter results after markets close.
The three companies will replace Exxon Mobil Corp XOM.N, Pfizer Inc PFE.N and Raytheon Technologies Corp RTX.N, which were down between 1.5% and 3.1% and were among the top drags on the S&P 500.
Exxon's drop also dragged the energy sector .SPNY down 1.6% despite oil prices touching 5-month highs. O/R
Apple Inc's AAPL.O 1.4% drop weighed heavily on the three main indexes and the company's shares were on course to fall after five days of gains.
At 12:44 p.m. ET, the Dow Jones Industrial Average .DJI was down 139.55 points, or 0.49%, at 28,168.91, the S&P 500 .SPX was up 1.86 points, or 0.05%, at 3,433.14. The Nasdaq Composite .IXIC was up 33.62 points, or 0.30%, at 11,413.34.
Medtronic MDT.N rose 2.3% after the company said demand for medical devices was improving as elective surgeries picked up pace, even as it posted a plunge in first-quarter profit.
Medtronic and Amgen's shares pushed the healthcare sector .SPXHC 0.5% higher, providing the biggest boost to the benchmark S&P 500.
American Airlines Group Inc AAL.O dropped 3.1% after it said its workforce will shrink by 40,000, including 19,000 involuntary cuts, in October unless the government extends aid for airline employee payrolls.
Declining issues outnumbered advancers for a 1.62-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 53 new highs and 22 new lows.
(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Bernard Orr, Arun Koyyur and Shounak Dasgupta)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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