US STOCKS-Wall Street dips after strong rally as U.S.-Iran tensions escalate

U.S. stocks slipped on Friday as rising tensions between the United States and Iran slammed the brakes on this week's run that lifted the S&P 500 to a record high. The Federal Reserve has signalled an interest rate cut as early as July, sparking a rally in stocks that helped the S&P 500 index closed at a new record of 2,954.18 on Thursday.

But an escalation in tensions in the Middle East after President Donald Trump delivered a warning of an imminent attack on Iran weighed on sentiment. "When you look at the magnitude of the move we've had in a short period of time, especially this week, I'm not surprised to see the markets lower today," said Art Hogan, chief market strategist at National Securities in New York.

"We know there's a G20 meeting, which could be binary in its results being bullish or bearish. It's not unusual for investors to take a bit of a pause." The United States and China have said that they would restart their trade talks after a long lull at the Group of 20 summits in Japan next week. Fears of the impact of the prolonged trade war on global economic growth had triggered the worst monthly performance of U.S. stock indexes this year in May.

The possibility of a disruption of oil flows if the U.S. attacks Iran fueled a 1% rise in crude prices and pushed the energy sector 0.4% higher. At 9:52 a.m. ET, the Dow Jones Industrial Average was down 24.19 points, or 0.09 per cent, at 26,728.98. The S&P 500 was down 6.67 points, or 0.23 per cent, at 2,947.51 and the Nasdaq Composite was down 37.68 points, or 0.47 per cent, at 8,013.66.

Chipmakers fell after Britain's IQE Plc became the latest semiconductor company to warn on full-year revenue, citing the impact of the Huawei ban. The Philadelphia chip index fell 0.52%, while the broader technology sector declined 0.35%.

Carnival Corp fell for the second day, down 3%, and among the biggest decliners. Several brokerages trimmed their price targets after the cruise operator cut its 2019 profit forecast. Declining issues outnumbered advancers for a 2.51-to-1 ratio on the NYSE and for a 3.15-to-1 ratio on the Nasdaq. The S&P index recorded 18 new 52-week highs and one new low, while the Nasdaq recorded 17 new highs and 29 new lows.