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U.S. stocks closed lower on Tuesday with  investors moving to reduce risk as House Speaker Nancy Pelosi’s arrival in Taiwan raised concerns about increased tensions between the U.S. and China.
The Dow Jones Industrial Average was off 1.22% at 32,396, the S&P 500 declined 0.66% to 4,091 and the Nasdaq Composite was down 0.16% at 12,348.
The lower stock indexes followed gentle losses in the first trading day of the month, while Beijing has been vocal about its opposition to Pelosi’s trip, the first visit by a high-ranking U.S. government official in more than 25 years.  
“We would like to tell the United States once again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity,” Chinese foreign ministry spokesman Zhao Lijian said in a daily briefing Monday.
“Whatever actions Beijing takes, it could trigger additional sanctions on China and sharply increase the risk of a direct military skirmish between the U.S. and China,” said Chen Zhao, Chief Strategist with global economic research firm Alpine Macro. “It is prudent for investors to think ahead and find ways to hedge their portfolios against the risk of a full-blown military confrontation between China and the U.S.”
On the economic data front, investors this week are awaiting the July nonfarm payrolls report slated for release Friday for further clues into the state of the economy and the job market. 
More earnings data is due out Tuesday with reports from Uber  (UBER) , Starbucks  (SBUX) , PayPal  (PYPL) , Advanced Micro Devices  (AMD) , and more.
CVS Health  (CVS) , Yum! Brands  (YUM) , MGM Resorts  (MGM)  and eBay  (EBAY)  will report their second-quarter earnings results on Wednesday, while Alibaba  (BABAF) , Eli Lilly  (LLY) , Warner Bros. Discovery  (WBD) , Amgen  (AMGN)  and Block  (SQ)  will release their second-quarter numbers on Thursday.
Among specific stocks, Pinterest  (PINS)  shares were up 11.4% after the online visual inspiration board company reported weak second-quarter results, which it said were hurt by a downturn in advertising revenue as well as increased costs. But the company reported an increase in users.
The San Francisco company saw weakness from advertisers in the consumer-packaged-goods category, big-box retailers and mid-market advertisers, finance chief Todd Morgenfeld said, adding that the digital advertising environment will continue to be challenging.
Activist investor Elliott Management confirmed separately that it is Pinterest’s top investor and said it has “conviction in the value-creation opportunity” at the company. 
Caterpillar  (CAT) , meantime, reported second-quarter earnings before the opening bell that handily beat analysts' forecasts. The heavy equipment maker, considered an economic bellwether in terms of demand for its machinery, posted adjusted per-share earnings of $3.18 on sales of $14.2 billion.
Wall Street was looking for about $3.03 in adjusted per-share earnings from about $14 billion in equipment sales. CAT stock closed 5.86% lower.
Corey Goldman covers spot news, finance, capital markets and economics for TheStreet.


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