The Dow and S&P fell modestly on Monday, ending well off session lows, as gains in energy shares helped curb declines stemming from trade war concerns after China's retaliation to US tariffs.

US President Donald Trump had said last week he was pushing ahead with tariffs on $50 billion of Chinese imports, prompting a quick response from Beijing, which said it would put duties on several American commodities.

Boeing , which has acted as a proxy for trade war tensions with China as it is the single largest US exporter to the country, fell 0.9 per cent as the biggest drag on the Dow. Construction equipment maker Caterpillar declined 0.9 per cent.

Chipmakers, which rely on China for a large portion of their revenue, also lost ground. The PHLX semiconductor index lost 0.99 per cent, its worst daily performance in a month. Intel, off 3.4 per cent, was the biggest drag on the S&P 500 and Nasdaq on tariff concerns and a downgrade by Northland Securities.

“You are seeing the trade narratives hammered, or at least running into some significant headwinds and as a result you are seeing compression in valuations there,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

The Dow Jones Industrial Average fell 103.01 points, or 0.41 per cent, to 24,987.47, the S&P 500 lost 5.79 points, or 0.21 per cent, to 2,773.87 and the Nasdaq Composite added 0.65 points, or 0.01 per cent, to 7,747.03.

Oil prices advanced in volatile trade as market participants lowered their expectations for how much OPEC might increase production. Even with the anticipated increase, Goldman Sachs maintained its bullish outlook on the oil market.

The S&P energy index rose 1.1 per cent for its first gain in five sessions. The index was boosted by gains in Chevron Corp , up 1.6 per cent, and ConocoPhillips, up 1.9 per cent.

“Clearly investors have already priced in some easing on the production limits that OPEC has had in place now for some time,” said Kenny.

The consumer staples index fell 1.5 per cent, with tobacco major Philip Morris down 2.3 per cent. Tobacco is among the 545 US goods that China plans to impose tariffs on as of July 6.

Among other stocks, Valeant Pharmaceuticals' US-listed shares tumbled 12.3 per cent after the US health regulator declined approval for the company's plaque psoriasis treatment lotion. Biotechnology firm China Biologic jumped 21.1 per cent after Chinese investment company CITIC Capital Holdings offered to buy it in a deal valuing the company at $3.65 billion.

Advancing issues outnumbered declining ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favoured advancers. The S&P 500 posted 23 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 172 new highs and 46 new lows.

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