*

Tesla rallies after Morgan Stanley ( MS ) adds stock to 'top

pick' list

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McDonald's rises on strong up-take of $5-meal deal

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Crypto stocks reverse earlier gains

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Indexes: Dow off 0.12%, S&P up 0.08%, Nasdaq up 0.07%

(Updates with closing prices, data)

By Sinéad Carew and Ankika Biswas

July 29 (Reuters) - The S&P 500 closed barely higher

after Monday's choppy trading session as investors held their

breath ahead of a raft of big technology company earnings, a

Federal Reserve policy decision on interest-rate cuts and key US

labor data, all due this week.

Quarterly reports from market heavyweights such as Microsoft ( MSFT )

and Apple ( AAPL ), Meta and Amazon.com ( AMZN )

this week will offer clues on whether technology stocks

are vulnerable or can extend their recent rallies.

Investors are hoping that the Fed will end its meeting

on Wednesday with a signal that it is preparing for a September

rate cut

in its

policy verdict

.

On Friday investors will closely monitor the July

non-farm payrolls report for signs of possible weakening in the

labor market.

"Understandably we're wavering," said Mona Mahajan,

principal and senior investment strategist at Edward Jones,

pointing to the upcoming catalysts and Wall Street's Friday

advance.

"Markets are largely in wait-and-see mode. We have big

economic news this week, both the Fed meeting Wednesday and the

jobs report on Friday. We also have huge earnings reports coming

out of mega cap technology," she said.

Technology megacaps have dominated Wall Street's

record-breaking run, prompting investors to recently turn their

attention to laggards such as mid- and small caps, which are

expected to benefit from a low-interest-rate environment.

"A lot of investors are keen to see whether the recent

rotation we've been seeing in the markets has legs, or does mega

cap technology really kind of shine through in its earnings

reports," Mahajan added.

However, the small-cap Russell 2000 lost 1% after

three straight weeks of gains.

The Dow Jones Industrial Average closed down 49.41

points, or 0.12% at 40,539.93 while the S&P 500 rose 4.44

points, or 0.08%, to 5,463.54. The Nasdaq Composite

advanced 12.32 points, or 0.07%, to 17,370.20.

Among the S&P 500's 11 major industry sector indexes,

consumer discretionary was the benchmark's biggest

boost with the sector's biggest contribution from Tesla

as the electric vehicle maker's stock rallied after Morgan

Stanley ( MS ) added it to its "top pick" U.S. autos' list.

The biggest percentage decliner among the major sectors was

energy, which lost 0.9% as oil prices fell.

McDonald's shares closed up 3.7% after it said its

$5-meal deal, launched late in June, was popular among customers

shying away from higher-price items. As a result the fast food

giant reported a surprise drop in sales, its first in 13

quarters.

Abbott Laboratories ( ABT ) shares pared earlier losses

to close down 0.4% after a jury ordered the healthcare company

to pay $495 million in damages following a trial that found its

formula for premature infants had caused a dangerous illness.

Crypto stock trading was also choppy with Coinbase Global ( COIN )

closing down more than 3% while Riot Platforms ( RIOT )

and Marathon Digital ( MARA ) finished down more than 5% after

jump early in the day when bitcoin prices hit seven-week

highs.

Declining issues outnumbered advancers by a 1.24-to-1 ratio

on the NYSE where there were 268 new highs and 47 new lows.

On the Nasdaq, 1,485 stocks rose and 2,731 fell as

declining issues outnumbered advancers by a 1.84-to-1 ratio. The

S&P 500 posted 35 new 52-week highs and two new lows. The Nasdaq

Composite recorded 120 new highs and 80 new lows.

On U.S. exchanges 9.96 billion shares changed hands compared

with the 11.16 billion moving average for the last 20 sessions.