UKX FTSE 100 Index

By Riva Gold and Allison Prang 

U.S. stocks slid Tuesday, giving up some gains a day after waning concerns about trade tensions between the U.S. and China helped send major global indexes to their highest close in months.

Shares waffled between small gains and losses for most of the session before turning lower in the final 90 minutes of trading. Industrial stocks -- which powered Monday's rally after Treasury Secretary Steven Mnuchin said the U.S. would suspend its efforts to apply tariffs to $150 billion in Chinese imports -- were among the biggest losers.

Boeing was the biggest drag on blue chips, falling 2.5%, while Caterpillar dropped 1.7%.

The Dow Jones Industrial Average fell 179 points, or 0.7%, to 24834, after rising Monday above 25000 for the first time since March. The S&P 500 fell 0.3%, and the Nasdaq Composite dropped 0.2%.

Financial stocks, meanwhile, were a bright spot, climbing 0.6% in the S&P 500. Those shares rallied as the House was expected to vote on a bill that would relieve small and regional lenders from a number of restrictions tied to the 2010 Dodd-Frank financial-overhaul law. If the bill becomes law, it would drastically cut the number of banks subject to heightened Federal Reserve oversight by raising a key regulatory threshold to $250 billion in assets from $50 billion.

Justin Wiggs, managing director for Stifel Nicolaus, said substantive deregulation is harder to obtain for bigger financial firms, but that regionals stand to gain.

"They would see outsized benefit," he said.

The KBW Bank Index, which comprises 24 different banks including large lenders like Bank of America and smaller firms like KeyCorp and Comerica, closed up 0.9%.

Mr. Wiggs said the market's midafternoon slide occurred after the S&P 500 tried and failed to break through a key technical level, spurring investors to add to their bearish positions.

Elsewhere, shares of Micron Technology climbed 6.4% after the memory-chip maker unveiled a $10 billion stock-buyback plan. Shares of J.C. Penney fell 6% after Chief Executive Marvin Ellison said he was leaving the company to run home-improvement retailer Lowe's. Shares of Lowe's fell 1.9%.

In other trade-related news, The Wall Street Journal reported the U.S. and China agreed on the broad outline of a deal that would save imperiled Chinese telecom giant ZTE. President Donald Trump said Tuesday that he "envisions" the company being fined as much as $1.3 billion but noted there is no final agreement regarding the firm.

"Anything tied to economic growth and the business cycle is going to be bid up in this environment where we get news that maybe the 'trade war' is less of a risk than it was prior to the comments," said Jason Ware, chief investment officer at Albion Financial Group.

Recent news "suggests that things are on hold for now, as far as this escalating into something that would be truly bad for the global economy and therefore global markets," he added.

For some, news around trade without specifics carries less weight.

Brian Smoluch, portfolio manager for Hood River Capital Management, who focuses on small-cap firms, said general comments on trade with China are "too general to make any sort of concrete investment move."

"The [market's] short-term gyrations are unpredictable," he said.

The Stoxx Europe 600 edged up 0.3%, while the U.K.'s FTSE 100 rose 0.2% to a record close, supported for most of May by gains in the U.S. dollar against the British pound and a rally in commodity prices that has lifted shares of energy and mining companies.

The WSJ Dollar Index fell 0.2%, while U.S. crude for June delivery settled down 0.2% at $72.13 a barrel.

In Asia, small earlier gains in the yen pressured Japanese multinationals, with the Nikkei edging down 0.2% from a two-month high.

--Giovanni Legorano contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

May 22, 2018 16:51 ET (20:51 GMT)

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