July 19, 2019 / 7:36 PM / 4 months ago

US STOCKS-Wall St moves lower on dampened hopes for hefty Fed cut

* Fed expected to cut interest rates by 25 bps

* Kansas City Southern gains on profit beat

* American Express falls as expenses rise

* Indexes down: Dow 0.02%, S&P 500 0.40%, Nasdaq 0.53% (Updates to late afternoon, changes byline, adds NEW YORK to dateline)

By Evan Sully and April Joyner

NEW YORK, July 19 (Reuters) - Wall Street's main indexes edged lower on Friday after a report that the Federal Reserve plans to cut interest rates by only a quarter-percentage point at the end of July.

The benchmark S&P 500 erased earlier marginal gains after the Wall Street Journal report here According to the report, while the U.S. central bank is not prepared to make a bigger 50-basis-point cut, it may make further rate cuts in the future given concerns about a decline in global economic growth and uncertainty about trade.

On Thursday, stocks had risen as comments from New York Fed President John Williams increased hopes of a bigger rate cut. Later that day, however, a New York Fed representative said that Williams' comments were not intended to telegraph any hints about upcoming Fed policy actions.

Futures market odds of a 50-basis-point cut at the Fed's July meeting soared to 71% late Thursday immediately after Williams' speech but fell to 23% on Friday, according to CME Group's Fedwatch tool.

"It appears that the Fed has communicated its message," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. "They're basically trying to clarify their policy."

The Dow Jones Industrial Average fell 5.85 points, or 0.02%, to 27,217.12, the S&P 500 lost 11.94 points, or 0.40%, to 2,983.17 and the Nasdaq Composite dropped 43.66 points, or 0.53%, to 8,163.58.

Earlier, U.S. stocks had edged higher as strong results from Microsoft Corp momentarily buoyed technology stocks. Microsoft shares were last marginally higher, up 0.3%.

Second-quarter profits at S&P 500 companies are now estimated to rise 1%, according to Refinitiv IBES data, in a reversal from earlier expectations of a small drop.

Boeing Co shares gained 4.2%, despite the planemaker's disclosure that it would take a $4.9 billion after-tax hit from the grounding of its 737 MAX, indicating that investors had expected more severe repercussions.

Kansas City Southern shares rose 4.0% after the railroad operator posted a better-than-expected quarterly profit. Its shares helped the Dow Jones Transport index gain 0.8%.

Shares of American Express Co slipped 2.6% after the credit card issuer warned of higher operating costs this year as it spends heavily on rewards programs to attract customers.

Declining issues outnumbered advancing ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored decliners.

The S&P 500 posted 45 new 52-week highs and five new lows; the Nasdaq Composite recorded 72 new highs and 76 new lows. (Reporting by Evan Sully and April Joyner Editing by Sonya Hepinstall)

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