*

S&P 500 down 0.3%, Nasdaq off 1%, Dow up 0.9%

*

Trump's tax and spending bill passes US Senate

*

Yields rise on stronger-than-expected jobs data

*

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

(Updates with early afternoon prices)

By Sruthi Shankar and Nikhil Sharma

July 1 (Reuters) - The S&P 500 and the Nasdaq dropped

from record highs on Tuesday, as Tesla shares were hit by a

renewed spat between CEO Elon Musk and President Donald Trump,

while better-than-expected economic data backed the U.S. central

bank's patient stance on rate cuts.

Tesla dropped 5% after Trump threatened to cut off

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

from the federal government, after Musk revived his criticism of

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

The Republican-controlled U.S. Senate voted 51-50 to pass

the bill that enshrines many of Trump's top priorities into law

while adding $3.3 trillion to the national debt. The bill, now

headed back to the House for final approval, aims to partly

cover the tax-reduction costs by cutting Medicaid and some food

assistance programs for low-income Americans.

The blue-chip Dow got a boost from healthcare stocks such as

UnitedHealth ( UNH ) and Amgen ( AMGN ), and was just about 600

points away from its all-time high touched in December.

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.

"Obviously you have this tariff uncertainty and until those

tariffs are announced and in place, it's really hard to sit

there and make a push for additional easing unless the economy

slows," said Mike O'Rourke, chief market strategist at

JonesTrading.

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.

The S&P 500 and the Nasdaq Composite posted record closing

highs on Monday, capping their best quarter in over a year as

hopes for more trade deals and possible rate cuts helped markets

recover from concerns about chaotic U.S. trade policies and

geopolitical tensions.

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.

At 11:43 a.m. ET, the Dow Jones Industrial Average

rose 394.56 points, or 0.89%, to 44,489.33, the S&P 500

lost 18.03 points, or 0.29%, to 6,186.92 and the Nasdaq

Composite lost 212.08 points, or 1.04%, to 20,157.66.

Technology stocks, down 1.4%, led the decline

among the major S&P sectors, while material stocks

climbed 2.4% and the healthcare sector added 2%.

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

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

and Las Vegas Sands ( LVS ) rose 8.4% each, while MGM Resorts

International ( MGM ) added 7.3%.

Advancing issues outnumbered decliners by a 1.85-to-1 ratio

on the NYSE and a 1.11-to-1 ratio on the Nasdaq.

The S&P 500 posted 18 new 52-week highs and no new lows

while the Nasdaq Composite recorded 63 new highs and 53 new

lows.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Devika

Syamnath)