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U.S. private payrolls beat expectations in April

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Super Micro Computer ( SMCI ) drops after Q3 revenue miss

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Amazon ( AMZN ) rises after Q1 results beat

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Indexes: Dow up 0.17%, S&P down 0.25%, Nasdaq down 0.18%

(Updated at 10:06 a.m. ET/ 1406 GMT)

By Shristi Achar A and Shashwat Chauhan

May 1 (Reuters) - The tech-heavy Nasdaq and the

benchmark S&P 500 slipped on Wednesday as chip stocks led losses

on downbeat results and markets weighed fresh economic data

ahead of the Federal Reserve's interest rate decision.

The ADP National Employment report showed U.S. private

payrolls increased more than expected in April, while a separate

reading showed U.S. manufacturing contracted in April. A measure

of prices paid by factories for inputs approached a two-year

high.

The U.S. central bank is widely

expected to hold rates

at the end of its two-day meeting, after a spate of recent

disappointing inflation readings crushed bets of rapid rate cuts

this year.

Money markets are pricing in just about 30 basis points

(bps) of rate cuts in 2024, down from around 150 bps seen at the

start of the year, according to LSEG data.

"The Fed from a more credibility perspective has to

acknowledge that the last few months have not been helpful in

terms of data," said Russell Hackmann, president of Hackmann

Wealth Partners.

"While they're probably not going to explicitly talk

about the possibility of rate hikes, they have to really signal

that the possibility of rate cuts is on hold until we start

getting some more friendly inflation data."

On the company earnings front,

Advanced Micro Devices ( AMD ) shed 6.3% after its forecast

for AI chip sales failed to impress investors, while Super Micro

Computer ( SMCI ) lost 15.4% as the artificial intelligence

server maker reported third-quarter revenue below estimates.

The weak results pressured other chip stocks as well, with

the Philadelphia Semiconductor Index losing 2.4%.

Helping the blue-chip Dow advance, Amazon.com ( AMZN )

outperformed other growth stocks to rise 3% on

better-than-expected quarterly results as interest in artificial

intelligence helped drive cloud-computing growth.

Johnson & Johnson ( JNJ ) added 3.5% after saying it is

moving forward with a $6.48 billion proposed settlement of tens

of thousands of lawsuits alleging that its baby powder and other

talc products contain asbestos and cause ovarian cancer.

At 10:06 a.m. the Dow Jones Industrial Average rose

63.31 points, or 0.17%, to 37,879.23, the S&P 500 lost

12.49 points, or 0.25%, to 5,023.20 and the Nasdaq Composite

lost 28.63 points, or 0.18%, to 15,629.20.

After a rough April, May will further test the

performance of equity markets as the first-quarter earnings

season continues and the interest rate outlook becomes clearer.

Six of the 11 S&P 500 sectors were trading lower, with

information technology amongst the worst hit with a

near 1% fall.

Among other movers, Starbucks ( SBUX ) dropped 15.1% as the

coffee giant cut its annual sales forecast and reported a fall

in same-store sales for the first time in nearly three years.

CVS Health ( CVS ) shed 18.5% after the healthcare giant

slashed its annual profit forecast and missed Wall Street

estimates for first-quarter earnings.

Advancing issues outnumbered decliners by a 1.27-to-1 ratio

on the NYSE and by a 1.42-to-1 ratio on the Nasdaq.

The S&P 500 posted five new 52-week highs and ten new lows

while the Nasdaq recorded 19 new highs and 59 new lows.

(Reporting by Shristi Achar A and Shashwat Chauhan in

Bengaluru; Editing by Devika Syamnath)