Wall St caution prevails

Specialist Meric Greenbaum, left, and trader John Liotti work on the floor of the New York Stock Exchange. File photo / AP

Wall Street was flat overnight in cautious trading, with sentiment bolstered by corporate earnings including from Merck and news that Windstream can spin off its telecommunications assets into a tax-lowering real estate investment trust.

Shares of Windstream soared, last up 11.6 per cent, after the company announced its tax-free spinoff plans. Shares of rivals AT&T and Verizon also advanced, last up 2.8 per cent and 1.6 per cent respectively, amid expectations they can benefit from the same.

"The REIT will have geographically diverse, high-quality assets and sustainable cash flows with the ability to grow and diversify over time," Jeff Gardner, CEO of Windstream, said in a statement.

In late afternoon trading in New York, the Dow Jones Industrial Average was 0.09 per cent lower, the Standard & Poor's 500 index dipped 0.14 per cent, while the Nasdaq Composite Index added 0.18 per cent. Stocks have ebbed and flowed between negative and positive in narrow trade through the session.

In the Dow, declines in shares of UnitedHealth and United Technologies, last down 1.7 per cent and 1.1 per cent respectively, outweighed gains in shares of AT&T and DuPont.

Shares of Merck climbed, last up 2 per cent, after the drug maker reported second-quarter earnings that exceeded expectations. Rival Pfizer also posted results that beat expectations but its shares were last down 0.7 per cent.

Shares of UPS fell, last down 3.1 per cent, after the company downgraded its full-year outlook, flagging plans to spend more to prepare for the peak shipping season.

While UPS said it was encouraged by the outlook, analysts and investors were less so.

"What's clear is the market is very competitive, and UPS is appropriately responding to it," Ben Hartford of Robert W Baird & Co in Milwaukee told Bloomberg News. "But from an investor's point of view, will the changes being made result in additional profit?"

Today there was another disappointing report on the state of the US housing industry. The S&P/Case Shiller composite index of 20 metropolitan areas posted a surprise drop in May, sliding 0.3 per cent on a seasonally adjusted basis.

"While we are not particularly alarmed by the surprising drop in home prices, this report adds to a growing list of housing indicators that are beginning to point in the wrong direction, which could be a early warning signal that all may not be well in this crucial segment of the economy," Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.

The Federal Open Market Committee started its two-day meeting on Tuesday. The Fed is expected to continue to pare its monthly asset purchases as it seeks to wind down its stimulus efforts.

In Europe, the Stoxx 600 Index ended the day with a 0.3 per cent gain from the previous close, as did the UK's FTSE 100 Index. France's CAC 40 rose 0.3 per cent, while Germany's DAX increased 0.6 per cent.

Shares in oil major BP fell 2.5 per cent in London after the company said its future earnings could be hit by the increasing level of sanctions against Russia. The European Union has approved a range of new restrictions on trade with Russia including on some equipment used by the oil sector.