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US factory activity slips for a second month in May, ISM

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Indexes: Dow off 0.12%, S&P up 0.22%, Nasdaq up 0.62%

(Updated at 10:14 am ET/1414 GMT)

By Lisa Pauline Mattackal and Johann M Cherian

June 3 (Reuters) -

The Nasdaq and the S&P 500 inched up on Monday as falling

U.S. Treasury yields boosted megacap growth stocks, while

investors assessed data that showed local manufacturing activity

had eased for the second consecutive month in May.

Megacap stocks including Apple ( AAPL ), Meta and

Alphabet gained between 1.1% and 1.7%, as yields on

the benchmark U.S. 10-year and five-year notes fell around 10

basis points each.

AI leader Nvidia ( NVDA ) rose 3.4%, leading a 0.8% charge

in the Philadelphia SE Semiconductor Index. Chief

executive Jensen Huang said on Sunday the company's

next-generation AI chip platform would be rolled out in 2026.

Shares of GameStop ( GME ) soared 26.8% after a weekend

Reddit post from stocks influencer Keith Gill, also known as

"Roaring Kitty," showed a $116 million bet on the gaming

retailer.

Elsewhere, NYSE Equities said it was

investigating a reported technical

issue that sent dozens of stocks listed on the exchange

into volatility pauses.

Six of the 11 S&P 500 sectors gained, led by a 0.9% rise in

tech, while energy lost 1.7%.

Signaling a cooling economy, a

survey from the Institute for Supply Management

showed manufacturing activity eased to 48.7 in May, lower

than the expectation of 49.6.

Yields began retreating from one-month highs on Friday

as investors increased bets on a September start to

interest-rate cuts by the Federal Reserve after inflation showed

signs of cooling, as measured by the Personal Consumption

Expenditures Price Index.

However, despite the S&P 500 and the Nasdaq

snapping their five-week winning streaks on Friday, all three of

Wall Street's main indexes ended May with strong gains.

The S&P 500 rose 4.8%, the Dow climbed 2.3% and the

tech-heavy Nasdaq rose nearly 7% last month, as strong earnings

and hopes of easing monetary policy buoyed Wall Street's biggest

stocks.

"AI drivers, earnings and inflation will continue to

drive the market," said Sam Stovall, chief investment strategist

at CFRA Research.

Attention turns to crucial data this week, including

surveys on the manufacturing and services sector, factory orders

and Friday's closely watched nonfarm payrolls report, which will

provide investors with clues on the health of the U.S. economy

and the Fed's likely course of action.

"We're going to be looking at employment data this Friday

and we're getting a whole slew of economic reports, so inflation

will still be very much foremost in investors' minds," Stovall

said.

At 10:14 a.m. ET, the Dow Jones Industrial Average

was down 46.63 points, or 0.12%, at 38,639.69, the S&P 500

was up 11.74 points, or 0.22%, at 5,289.25, and the

Nasdaq Composite was up 103.70 points, or 0.62%, at

16,838.71.

The blue-chip Dow underperformed, weighed by a drop in

financial stocks such as Goldman Sachs ( GS ) and JPMorgan Chase

& Co. ( JPM )

Paramount Global ( PARAA ) rose 7.1% after a report that

Skydance Media was poised to take over the company.

JetBlue Airways ( JBLU )

forecast a smaller drop

in second-quarter revenue than previously forecast due to

healthy travel demand, sending its shares up

4.7

%.

Advancing issues outnumbered decliners by a 1.34-to-1 ratio

on the NYSE

and

by a 1.38-to-1 ratio on the Nasdaq

.

The S&P index recorded

18

new 52-week highs and three new lows, while the Nasdaq

recorded

39

new highs and

46

new lows.