(Reuters) – The S&P 500 and Dow edged higher on Tuesday as investors held out for more U.S. government stimulus, but an escalation in Sino-U.S. tensions over TikTok and disappointing quarterly earnings from Ralph Lauren and AIG capped gains.

Ralph Lauren Corp (RL.N) slumped 8.0% to its lowest since mid-May after quarterly revenue plunged by nearly $1 billion due to coronavirus-led store closures and a slowdown in global demand for luxury goods.

American International Group Inc (AIG.N) also led declines on the S&P 500 with a 6.5% drop as its quarterly adjusted profit slumped.

Reflecting the cautious mood, defensive stocks including real estate .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS led gains among the major S&P 500 sectors. Energy .SPNY shone among the growth-linked cyclical sectors.

All eyes are now on a fifth major coronavirus-aid bill, with Senate Democratic Leader Chuck Schumer saying talks with the White House were moving in the “right direction”.

“A good portion of the stimulus and any likely improvement in fundamentals has been priced in and we are seeing that in stretched valuations,” said Talley Leger, senior investment strategist at Invesco in New York City.

“U.S. equities in general are one of the most overvalued markets in the developed world, centered on technology.”

A stimulus-led rebound and a rally in tech-related stocks including Apple Inc (AAPL.O), Netflix Inc (NFLX.O) and Amazon.com Inc (AMZN.O) has brought the S&P 500 to within 3% of its all-time high.

Meanwhile, with Microsoft Corp (MSFT.O) looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price.

On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company.

Microsoft’s shares fell 2.6%.

At 11:24 a.m. ET, the Dow Jones Industrial Average .DJI was up 114.15 points, or 0.43%, at 26,778.55, and the S&P 500 .SPX was up 5.51 points, or 0.17%, at 3,300.12. The Nasdaq Composite .IXIC was down 8.87 points, or 0.08%, at 10,893.93.

Take-Two Interactive Software Inc (TTWO.O) rose 4.8% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”.

Rival Activision Blizzard Inc (ATVI.O) edged higher ahead of its results due after the closing bell.

Spirit AeroSystems (SPR.N) dropped 3.7% on posting a bigger-than-expected quarterly loss.

About 83% of the 352 companies in the S&P 500 that have reported quarterly results so far have beaten estimates for earnings, according to IBES Refinitiv data.

Walt Disney Co (DIS.N), Fox Corp (FOXA.O) and Wynn Resorts Ltd (WYNN.O) are also expected to report quarterly results later in the day.

Advancing issues outnumbered decliners 1.76-to-1 on the NYSE and 1.23-to-1 on the Nasdaq.

The S&P index recorded 20 new 52-week highs and no new low, while the Nasdaq recorded 100 new highs and six new lows.

Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; editing by Uttaresh.V

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