US stocks were slightly lower in choppy trade yesterday while the dollar strengthened and the US yield curve flattened after European equities reversed earlier gains to close lower.

US futures had pointed to gains, but the major indexes turned negative soon after Wall Street opened and then oscillated throughout the session. Asian stocks rose after China promised to stabilize its economy and offset the impact of US tariffs.

The US dollar rose as the British pound fell on news that Brexit negotiations with the European Union over Northern Ireland remain in flux and as the euro continued its slide on political uncertainty over Italy’s budget.

Financial stocks were the biggest drag on the S&P 500 while the US Treasury yield curve flattened to its lowest level in more than two weeks before the Treasury Department was due to sell $108 billion in new short- and intermediate-dated debt.

Two-year yields rose to their highest levels in a decade.

The Dow Jones Industrial Average fell 181.01 points, or 0.71 per cent, to 25,263.33, the S&P 500 lost 13.55 points, or 0.49 per cent, to 2,754.23 and the Nasdaq Composite added 15.13 points, or 0.2 per cent, to 7,464.15.

After rising as much as 0.7 per cent earlier in the day European stocks closed down 0.3 per cent as relief over Moody's decision to keep Italy’s sovereign rating outlook stable was short-lived and the focus turned to Europe’s response to Rome's budget plans.

In China, Shanghai blue chips had gained 4.3 per cent, in their biggest one-day gain since November 2015, after Beijing promised stimulus support for stock markets in the world’s second-largest economy.

Investors also looked ahead to the peak week for the US earnings season, with Amazon, Alphabet, Microsoft and Caterpillar among the companies reporting.

Helped by a strong economy and deep corporate tax cuts, S&P 500 earnings per share are expected to grow 22 per cent in the third quarter, according to I/B/E/S data from Refinitiv.

The dollar index rose 0.32 per cent, with the euro down 0.44 per cent to $1.1462.

Sterling, meanwhile, slipped 0.7 per cent against the dollar as fears grew that the Irish border issue and other disputes over Brexit would see British Prime Minister Theresa May face a serious challenge to her leadership.

Benchmark 10-year notes last rose 3/32 in price to yield 3.1921 per cent, from 3.202 per cent late on Friday.

Oil trading was also choppy, with United States crude rising 0.03 per cent to $69.30 per barrel and Brent last up 0.05 per cent to $79.82.

Spot gold dropped 0.4 per cent to $1,220.80 an ounce.

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