(CNN) - The Dow and broader stock market fell back from Monday's sharp gains.
A day after optimism over progress in the US-China trade spat pushed stocks higher, the stock market seems quieter. All three major indexes fell into negative territory, before midday.
The Dow traded 0.1%, or 30 points, lower, while the S&P 500 and Nasdaq Composite slipped 0.1% and 0.3%, respectively.
"Hope triumphed over realism yesterday, and realism is fighting back," today, wrote Marc Chandler, chief market strategist at Bannockburn Global Forex.
On Monday, President Donald Trump said that China was keen to head back to the negotiating table. Stocks rallied in response, retracing some of the losses they had incurred on Friday, when the trade spat escalated. However, this optimism seems to have tapered off some.
With three trading days left in the month of August, the Dow is on pace for a more-than-3.5% drop. The S&P and the Nasdaq are looking at a 3% and 4.1% drop this month, according to Refinitiv.
Two stocks of note to watch: Philip Morris and Altria have confirmed that they are in merger talks. Philip Morris stock is more than 6% down, while Altria's shares climbed more than 1%.
Consumer confidence data for August came in stronger than expected at 135.1, versus the Refinitiv consensus forecast of 129.5.
After a strong July, economists expected consumer confidence to fall. Although the August level is lower than last month's, consumers remain confident on the whole.
Consumers are keeping the US economy going, but President Trump remains on the Federal Reserve's case to cut interest rates further.
Former New York Fed President William Dudley wrote in an op-ed on Bloomberg that Trump's trade war with China is endangering the country's economic outlook, in turn propelling the Fed to cut rates.
"Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election," Dudley wrote.
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