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Dow closes up 0.91%; Nasdaq falls 0.82%; S&P drops 0.11%

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Trump says not thinking of extending deadline for trade

deals

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Trump's tax and spending bill passes US Senate

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Tesla slides to 3-week low as Trump-Musk feud reignites

(Adds closing stock prices)

By Sabrina Valle

NEW YORK, July 1 (Reuters) - The Nasdaq and the S&P 500

closed lower on Tuesday, dragged down by weakness in large-cap

tech stocks, while the Dow ended higher in a volatile day marked

by seasonally low liquidity.

Investors navigated a choppy session, between optimism over

stimulus and caution around market concentration around a few

tech stocks.

A sell-off of a few megacap tech and tech-adjacent momentum

stocks, that had especially high gains in recent weeks, left

markets vulnerable to sharp swings. The NYFANG index, which

tracks 10 heavily traded tech names, fell 1.8%.

"We got to very overbought levels on tech and Nasdaq over

the past weeks," said Farz Azarm, managing director of Equities

trading with Mizuho Americas. "Today you are seeing a massive

unwind" of this movement, he said.

Dow Jones Industrial Average rose 400.17 points, or

0.91%, to 44,494.94. The S&P 500 lost 6.94 points, or

0.11%, to 6,198.01 and the Nasdaq Composite lost 166.84

points, or 0.82%, to 20,202.89.

News from Washington helped fuel optimism. U.S. President

Donald Trump said he was not thinking of extending the July 9

deadline for countries to negotiate trade deals with the U.S.,

easing investor concerns about prolonged uncertainty.

The Senate's passage of Trump's tax package had investors

weighing the bill's stimulative effects against its

multi-trillion dollar cost.

Tesla shares were hit by a renewed spat between CEO Elon

Musk and Trump, while economic data backed the U.S. central

bank's patient stance on rate cuts.

Tesla dropped 5.4% after Trump threatened to cut

off the billions of dollars in subsidies that Musk's companies

get from the federal government. Musk had revived his criticism

of Trump's wide-ranging tax cut and spending bill.

The blue-chip Dow got a boost from economically sensitive

sectors such as materials and smallcaps, which

outperformed. The Dow Transportation index, widely

considered an economic barometer, jumped 2.9%, its biggest

one-day gain since May 12.

"The markets are preparing for a boatload of stimulus with

an already healthy economy," said Rich Bernstein, CEO of Richard

Bernstein Advisors. "But we are still in a very speculative

market."

Data showed U.S. job openings increased unexpectedly in

May, suggesting labor market resilience despite trade and

economic uncertainties. U.S. Treasuries fell in response,

pushing the 2-year yield to a near one-week high.

Earlier in the day, Federal Reserve Chair Jerome Powell

reiterated the U.S. central bank plans to "wait and learn more"

about the impact of tariffs on inflation before lowering rates,

again setting aside Trump's demands for immediate and deep rate

cuts.

The Institute for Supply Management (ISM) said its manufacturing

PMI nudged up to 49.0 last month from a six-month low of 48.5 in

May, slightly above economists' forecast of 48.8.

Market focus now shifts to Thursday's nonfarm payrolls

report, which could help recalibrate bets for a rate cut as soon

as July.

Money markets are pricing in a 21.2% likelihood for a July

rate cut and see about 64 basis points worth of cuts by the end

of this year, per LSEG data.

Shares of U.S.-based casino operators rose after Macau reported

a rise in June gambling revenue. Wynn Resorts ( WYNN ), Las

Vegas Sands ( LVS ) and MGM Resorts International ( MGM ) added

more than 7% each.