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KB Home ( KBH ) falls after Q3 profit misses estimates

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Apple ( AAPL ) edges down as data shows China sales drop in Aug

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Ford, GM slide on Morgan Stanley downgrade

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Dow weighed down by decline Amgen ( AMGN )

(Updates with closing details)

By Echo Wang

Sept 25 (Reuters) -

The Dow Jones Industrial Average and S&P 500 closed lower on

Wednesday, retreating from recent record highs fueled by China's

sweeping stimulus package

, as investors awaited further economic indicators and

signals on upcoming interest rate cuts.

The three main indexes were set for monthly gains after the

Federal Reserve's rate cut on Sept. 18 boosted hopes of a soft

landing. However, a weak consumer sentiment report on Tuesday

raised concerns about the labor market health.

"What happened in commodities and basic materials, etc., was

quite a reaction to ... 'hey, what if China can get growing

again?' And that kind of feeds into other areas, (and) it helps

other economies," said Tom Martin, senior portfolio manager at

Globalt in Atlanta.

The long-term Treasury bond yield

rose on concerns that looser financial conditions could reignite

inflation.

Odds of a 50 basis point cut by the U.S. central bank at its

November meeting have risen to 57.4%, from a coin toss earlier

in the week, the CME Group's FedWatch Tool showed.

According to preliminary data, the S&P 500 lost 10.10

points, or 0.18%, to end at 5,722.83 points, while the Nasdaq

Composite gained 8.22 points, or 0.05%, to 18,082.74.

The Dow Jones Industrial Average fell 284.95 points, or

0.68%, to 41,924.38.

The blue-chip Dow slipped after hitting record highs,

pressured by a decline in Amgen ( AMGN ), which reported mixed

data on two drugs, sparking concerns over heightened

competition.

The S&P 500 and the tech-heavy Nasdaq have risen about 20%

so far this year, driven by expectations of rate cuts and

optimism about artificial intelligence. However, the S&P 500 is

trading at valuations significantly above long-term averages.

"Valuations are fairly high right now, sentiment is fairly

high," Martin said, noting that caution is creeping in. "It's

hard to find bargains out there, because everything that has

gotten hit, a lot of it has come back, and the market has

broadened out."

Sales of new U.S. single-family homes fell in August, but

declining mortgage rates and house prices could stimulate demand

in the months ahead.

The focus, however, will be on weekly jobless claims and the

August U.S. personal consumption expenditure (PCE) index, both

set to be released later in the week.

Remarks from Fed Governor Adriana Kugler, expected after

markets close, will also be closely examined. But attention will

center on Fed Chair Jerome Powell's speech at the New York

Treasury Market Conference on Thursday.

Apple ( AAPL ) shares retreated as sales of foreign-branded

smartphones, including iPhones, in China fell in August on an

annual basis, data from a government-affiliated research firm

showed.

Citigroup ( C/PN ), Bank of America ( BAC ) and JPMorgan &

Chase ( JPM ) weighed on the broader bank index.

KB Home ( KBH ) slipped after posting a downbeat

third-quarter profit.

Hewlett Packard Enterprise ( HPE ) topped the S&P 500 after

Barclays' rating upgrade.

Shares of Ford General Motors fell after

Morgan Stanley lowered

its recommendations on the automakers.