Dow's streak of records ends ahead of Trump address

New York - European stock markets closed modestly higher on Tuesday while Wall Street investors kept their powder dry as caution reigned on trading floors before Donald Trump's speech to a joint session of Congress.

London, Frankfurt and Paris finished with small gains, while US stocks retreated, with the Dow at last declining after notching 12 straight record closes.

Investors were "opting to sit on their hands ahead of Trump's speech to Congress," said Chris Beauchamp, chief market analyst at IG trading group.

Trump has said he will boost military spending, while cutting back on social spending programs.

The market is also looking for details from Trump on a tax cut plan, the promise of which has propelled US stocks to record highs since the US presidential election.

Trump has spoken of offering a "phenomenal" tax cut plan, but has yet to release details.

"A speech of more superlatives won't be all that super in our estimation, yet this market has shown a terrific degree of willingness to accept form over substance, so we can't assume it will be put off entirely by another speech of generalities," said Briefing.com analyst Patrick O'Hare.

But some analysts urged caution, saying any disappointment in Trump's remarks could have big consequences for stock markets.

Trump's speech upon taking the presidency in January was seen as protectionist and dampened enthusiasm for US stocks for a few weeks.

"The threat of today's speech mirroring the inaugural address could trigger a tidal wave of risk aversion," warned Lukman Otunuga at FXTM.

"Global markets have been somewhat patient and even resilient against the persistent Trump uncertainties, but the crack could start to show if nothing new is brought to the table."

Trump is due to start speaking at 02:00 GMT on Wednesday.

Among economic sectors, retailers were in retreat following a gloomy earnings report and outlook from Target, which signalled lower-than-expected profits in 2017 due to stepped-up investments in stores and low-priced offerings as it tries to win back customers.

Target tumbled 12.2%. Other large retailers also suffered declines, including Wal-Mart Stores, Best Buy and Macy's.