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* US Treasury yields at 7-yr highs; bond market closed for holiday
* Tech, communication stocks drop; defensive sectors gain
* Dow up 0.18 pct, S&P flat, Nasdaq down 0.64 pct (Updates to late afternoon, changes byline, adds NEW YORK to dateline)
By April Joyner
NEW YORK, Oct 8 (Reuters) - The S&P 500 was little changed on Monday as concerns mounted about the impact on China’s economy from trade tensions between the United States and China.
Beijing announced a steep cut in the level of cash that banks must hold as reserves, aimed at lowering financing costs and spurring growth amid the trade spat between China and the United States. In Monday’s trading session, the first trading session for mainland China investors since the two countries imposed additional tariffs on each other’s imports, both Chinese stocks and the yuan slid.
The dollar rose slightly in response to the turmoil in Chinese markets. Some investors have grown concerned that the stronger dollar, along with mounting tariffs, could hurt large U.S. exporters as their products become more expensive for overseas customers.
“These are things that could derail the good momentum in the economy right now,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.
The U.S. Treasury is concerned about China’s currency depreciation and is monitoring developments related to the yuan, a senior department official said on Monday.
Though the U.S. bond market was closed for the Columbus Day holiday, the yield on the 10-year Treasury note, which hit a seven-year high last week, also kept investors on edge.
“There is anxiety about how the bond market will reopen and when you get a little bit of a downturn, the sentiment just builds over it,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
The Dow Jones Industrial Average rose 46.47 points, or 0.18 percent, to 26,493.52, the S&P 500 gained 0.46 points, or 0.02 percent, to 2,886.03 and the Nasdaq Composite dropped 50.09 points, or 0.64 percent, to 7,738.36.
On the S&P, the technology and communication services sectors led in declines. Among the biggest drags on the index were Microsoft Corp, down 0.8 percent and Alphabet Inc, down 0.9 percent.
Alphabet’s Google said that it would shut down the consumer version of its social network Google+ after announcing that data from up to 500,000 users may have been exposed to external developers.
Defensive sectors, including utilities, consumer staples, and real estate, led the S&P’s major sectors in percentage gains.
Shares of General Electric Co rose for the sixth day in a row after the company said it plans to sell $1 billion in energy investments to Apollo Global Management LLC. GE shares were last up 3.3 percent.
Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored decliners.
The S&P 500 posted 8 new 52-week highs and 23 new lows; the Nasdaq Composite recorded 16 new highs and 137 new lows. (Additional reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Chizu Nomiyama)