US STOCKS-Wall Street slips as Middle East conflict escalates

By Kanchana Chakravarty and Sukriti Gupta

June 17 (Reuters) - Wall Street's main indexes slipped on Tuesday as the Israel-Iran conflict entered its fifth day, denting global investor confidence ahead of the Federal Reserve's upcoming monetary policy decision.

Iran and Israel's air war, which began on Friday when Israel attacked Iran's nuclear facilities, has raised concerns that the conflict could create bottlenecks for oil exports from the oil-rich Middle East.

"(Wall Street believes) that the situation is going to be contained. The market is definitely paying attention to it, but right now there's no panic in the market over it," said Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report.

U.S. energy stocks rose as oil prices remained elevated on the uncertainty. Chevron CVX.N was up 1.8% and Exxon XOM.N advanced 1.7%.

The surge in oil prices comes ahead of the Fed's monetary policy decision on Wednesday, when policymakers are widely expected to keep interest rates unchanged.

Money market moves show traders are pricing in about 46 basis points of rate cuts by the end of 2025, with a 57% chance of a 25-bps rate cut in September, according to CME Group's FedWatch tool.

At 10:05 a.m. ET the Dow Jones Industrial Average .DJI fell 109.04 points, or 0.26%, to 42,406.05, the S&P 500 .SPX lost 21.71 points, or 0.36%, to 6,011.40 and the Nasdaq Composite .IXIC dropped 88.94 points, or 0.45%, to 19,612.28.

Ten of the 11 major S&P 500 sub-sectors fell. Healthcare .SPXHC stocks dropped the most, with an about 0.8% decline. On the flip side, energy .SPNY stocks gained 1.6%.

Data on Tuesday showed U.S. retail sales dropped more than expected in May, while factory production barely rose last month.

U.S. Senate Republicans late on Monday unveiled proposed changes to President Donald Trump's sweeping tax-cut bill that had cleared the House of Representatives in May.

Solar stocks dipped after the Senate's changes to Trump's tax-cut bill revealed a phase-out of solar, wind and energy tax credits by 2028.

Shares of Enphase Energy ENPH.O dropped 23.3% and Sunrun RUN.O fell 39.4%. Invesco Solar ETF TAN.P was down 8.8%.

Shares of nuclear power companies rose after the Senate extended credits for nuclear energy to 2036. Oklo OKLO.N was up 3.3%, while Nano Nuclear Energy NNE.O rose 4.3%.

As investors flock to traditional safe-haven assets amid heightened geopolitical uncertainty, a rise in U.S. Treasuries pushed yields lower across the curve. Yields on the benchmark 10-year US10YT=RR fell about 2 basis points to 4.43%.

Most megacap and growth stocks fell. Tesla TSLA.O lost 1.9%, while Alphabet GOOGL.O was down about 1%.

Among other movers, Eli Lilly LLY.N fell 1.1% after it agreed to acquire Verve Therapeutics VERV.O for up to $1.3 billion. Shares of Verve surged 73.7%.

T-Mobile TMUS.O fell 3.9% as Japan's SoftBank 9984.T raised $4.8 billion from a sale of 21.5 million of the wireless carrier's shares at $224 each, according to a term sheet reviewed by Reuters.

Declining issues outnumbered advancers by a 1.67-to-1 ratio on the NYSE and by a 1.75-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and eight new lows, while the Nasdaq Composite recorded 31 new highs and 50 new lows.