(For a Reuters live blog on U.S., UK and European stock

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Qualcomm ( QCOM ) up after win against Arm in chips trial

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Lilly gains after weight-loss drug approved for sleep

apnea

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Indexes: Dow down 0.58%, S&P 500 down 0.09%, Nasdaq up

0.27%

(Updates to late morning trading)

By Medha Singh and Purvi Agarwal

Dec 23 (Reuters) -

The S&P 500 and the Dow fell on Monday in holiday-thinned

trading after a stopgap government funding bill averted a U.S.

government shutdown and investors braced for a slower pace of

rate cuts from the Federal Reserve next year.

After a solid run since the November presidential

election, Wall Street's rally hit a bump this month, especially

after the U.S. Federal Reserve forecast just two 25-basis-point

rate reductions for 2025 - down from its September view of four

cuts - and raised its annual inflation outlook.

A cooler-than-expected inflation report on Friday helped

U.S. stocks recoup some losses. However, overall market

sentiment was still cautious, said Thierry Wizman, strategist at

Macquarie.

Money markets expect roughly two 25-bps reductions in

2025, which would bring the benchmark rate to a range of 3.75%

to 4.0%, from about a 3.50% to 3.75% range two weeks ago.

"It's a Monday with very few catalysts to drive (broad

market) sentiment, and we're going to have low volume, likely

volatile trading as we work our way out of this year," said Art

Hogan, chief market strategist, B Riley Wealth.

Trading volumes are expected to thin, with U.S. stock

markets closing early on Tuesday and shut for Christmas on

Wednesday.

The United States Congress passed spending legislation early

on Saturday, minutes after the funding's expiration, which could

have disrupted everything from law enforcement to national parks

ahead of the busy Christmas travel season.

At 11:07 a.m. the Dow Jones Industrial Average fell

247.19 points, or 0.58%, to 42,593.07 and the S&P 500

lost 5.47 points, or 0.09%, to 5,925.38.

The Nasdaq Composite gained 52.79 points, or

0.27%, to 19,625.38, buoyed by gains in chipmakers and megacap

stocks.

Nvidia ( NVDA ) added 1.6% and Meta Platforms ( META )

rose 1.4%.

Apple's ( AAPL ) market capitalization stood at $3.84

trillion as the world's most valuable company inched closer to

the $4 trillion milestone.

Markets are also entering a historically strong period for

U.S. stocks. Since 1969, the last five trading days of the year,

combined with the first two of the following year, have yielded

an average S&P 500 gain of 1.3% - a period known as the "Santa

Claus Rally", according to the Stock Trader's Almanac.

Qualcomm's ( QCOM ) shares rose 1.7% after a jury found its

central processors are properly licensed under an agreement with

UK-based Arm Holdings. Shares of Arm, which has vowed to

seek a fresh trial, fell about 5%.

Walmart ( WMT ) fell 3.3% after the U.S. consumer

finance watchdog accused the retail giant and workforce payments

company Branch Messenger of forcing more than a million delivery

drivers into using accounts that cost them more than $10 million

in junk fees.

Eli Lilly ( LLY ) gained 1.7% after the U.S. Food and

Drug Administration approved the drugmaker's weight-loss

treatment, Zepbound, for obstructive sleep apnea. Shares of

sleep apnea device makers ResMed ( RMD ) and Inspire Medical ( INSP )

fell about 4% each.

Declining issues outnumbered advancers by a 2.56-to-1

ratio on the NYSE, and by a 1.91-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and 11 new

lows, while the Nasdaq Composite recorded 35 new highs and 86

new lows.