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Dow falls more than 1%

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Airlines fall after American Airlines ( AAL ) cuts profit forecast

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Fed's Beige Book shows continued economic expansion

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Indexes down: Dow 1.06%, S&P 500 0.74%, Nasdaq 0.58%

(Updates to 4:15 p.m. ET)

By Abigail Summerville

NEW YORK, May 29 (Reuters) - U.S. stocks fell on

Wednesday amid further gains in Treasury yields and concern over

the timing and scale of possible interest rate cuts from the

Federal Reserve.

The Dow fell more than 1% and hit its lowest level in nearly

a month. All of the S&P 500 sectors ended lower as well, with

rate-sensitive utilities among sectors with the

biggest declines.

The yield on the benchmark 10-year U.S. Treasury note hit

four-week highs at 4.6%, extending Tuesday's gains, after weak

debt auctions.

"You continue to see this rise in bond yields, which is

pressuring equities... It's a continuation of this unstable,

uneven recovery," said James Abate, fund manager of the Centre

American Select Equity fund.

Conflicting expectations on the size and the timing of

potential interest rate cuts have kept the market on edge since

the start of this year.

Sticky inflation and hawkish comments from central bankers

have forced traders to temper down rate cut expectations to only

one by November or December, per the CME FedWatch Tool, from

multiple cuts expected at the start of the year.

Stocks held their losses following the release of the Beige

Book, a U.S. Fed survey. It showed U.S. economic activity

continued to expand from early April through mid-May, but firms

grew more pessimistic about the future while inflation increased

at a modest pace.

The S&P 500 lost 39.09 points, or 0.74%, to

5,266.95 while the Nasdaq Composite lost 99.30 points,

or 0.58%, to 16,920.58. The Dow Jones Industrial Average

fell 411.32 points, or 1.06%, to 38,441.54.

The main focus this week will be on Friday's release of

April's Personal Consumption Expenditure data - the Fed's

preferred inflation gauge.

The Nasdaq retreated after closing above the 17,000 mark for

the first time on Tuesday, while the small-caps Russell 2000

index fell 1.5%.

After the closing bell, shares of Salesforce ( CRM ) were

down more than 15% as the company reported results and forecast

second quarter revenue below estimates. Salesforce ( CRM ) shares ended

the regular session up 0.7%.

During the regular session, shares of Marathon Oil ( MRO )

advanced 8.4% after ConocoPhillips ( COP ) said it would buy the

company in an all-stock deal for a little over its $15 billion

market value. ConocoPhillips ( COP ) fell 3.1%. The energy sector

dropped 1.8%.

Airline stocks declined, led by American Airlines ( AAL ),

which declined 13.5% after the company cut its second-quarter

profit forecast.

Dick's Sporting Goods rose 15.9% after lifting

forecasts for annual sales and profit, while Abercrombie & Fitch ( ANF )

shot up 24.3% on raised annual sales growth forecast.

On the Nasdaq, declining issues outnumbered advancers by a

2.78-to-1 ratio and a 5.25-to-1 ratio on the NYSE.

The S&P 500 posted 7 new 52-week highs and 16 new lows while

the Nasdaq Composite recorded 45 new highs and 149 new lows.

Volume on U.S. exchanges was 12.24 billion shares, compared

with the 12.38 billion average for the full session over the

last 20 trading days.