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Manufacturing PMI weakens in June

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S&P 500 Banks index at one-month high

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Spirit AeroSystems ( SPR ), Boeing ( BA ) gain after deal

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Chewy jumps after Keith Gill discloses stake

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Indexes: Dow up 0.09%, S&P flat, Nasdaq up 0.35%

(Updated at 11:58 a.m. ET)

By Ankika Biswas and Lisa Pauline Mattackal

July 1 (Reuters) - Megacap stocks lifted the tech-heavy

Nasdaq in volatile trading on Monday, while the S&P 500 and the

Dow were nearly flat, with focus moving to labor market data due

later in the week for cues on the timing of interest rate cuts

this year.

Apple ( AAPL ), Microsoft ( MSFT ) and Amazon.com ( AMZN )

rose between 1.2% and 2.1%, and were the biggest boosts to the

Nasdaq.

Semiconductor stocks such as Advanced Micro Devices ( AMD ),

Arm Holdings and Micron Technology ( MU ) fell between

1% and 4%, pulling the Philadelphia SE Semiconductor index

to a near one-week low.

Real estate stocks, also seen as a bond proxy,

dropped 1.5%. As U.S. Treasury yields hit multi-week highs, the

S&P 500 banks index jumped to a more than one-month

peak. JP Morgan Chase shares were at an all-time high.

With the equity market shut on Thursday for U.S.

Independence Day, trading is expected to be volatile in thin

volumes during the week.

Manufacturing PMI data from the Institute for Supply

Management showed manufacturing contracted for a third straight

month in June, while prices paid dropped to a six-month low in

an encouraging sign for the U.S. Federal Reserve's battle with

inflation.

"While manufacturing is contracting, the rest of the economy

is in decent shape ... the Fed wants the economy to keep running

in low gear near-term. They will see ongoing softness in

manufacturing as contributing to their goal of less inflation,"

Bill Adams, chief economist for Comerica Bank, said.

Traders have stuck to their bets of around two interest rate

cuts this year, starting from September, LSEG FedWatch showed.

Also scheduled for the week are JOLTS job openings data on

Tuesday, and ADP employment, factory orders, ISM services PMI

data and minutes of the Fed's latest policy meeting on

Wednesday. Non-farm payroll data is due on Friday.

Fed New York President John Williams noted he continues to

believe price pressures are moderating back to the 2% target.

At 11:58 a.m. ET, the Dow Jones Industrial Average

was up 35.06 points, or 0.09%, at 39,153.92, the S&P 500

was up 2.47 points, or 0.05%, at 5,462.95, and the Nasdaq

Composite was up 61.29 points, or 0.35%, at 17,793.89.

The Nasdaq and the S&P 500 notched their third quarterly

gains on Friday, with the tech-heavy index doing so for the

first time in three years. However, the Dow's quarterly decline

has raised concerns about the need for greater diversification

in investor holdings.

Spirit AeroSystems ( SPR ) gained 3.4% following Boeing's ( BA )

deal to buy back the fuselage supplier for $4.7 billion

in stock. Boeing's ( BA ) shares rose 3%.

Chewy dropped 6.1%, reversing sharp early gains,

after stock influencer Keith Gill, also known as "Roaring

Kitty", disclosed a 6.6% stake in the pet products retailer.

Declining issues outnumbered advancers for a 2.19-to-1 ratio

on the NYSE and for a 1.72-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and three new

lows, while the Nasdaq recorded 31 new highs and 92 new lows.