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US services sector cools in February, ISM survey shows

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Target ( TGT ) forecasts FY comparable sales above estimates

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Apple ( AAPL ) drops after China iPhone sales plunge

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Indexes down: Dow 0.50%, S&P 0.61%, Nasdaq 1.29%

(Updated at 10:10 a.m. ET/1510 GMT)

By Bansari Mayur Kamdar and Amruta Khandekar

March 5 (Reuters) -

Wall Street fell on Tuesday, with weakness in megacap growth

stocks weighing on the Nasdaq as investors assessed a slew of

economic data and awaited remarks from Federal Reserve Chair

Jerome Powell.

Data showed

U.S. services industry growth

slowed a bit in February amid a decline in employment, but

a measure of new orders increased to a six-month high, pointing

to underlying strength in the sector.

The PMI was consistent with continued economic expansion

despite 525 basis points worth of interest rate hikes from the

Fed since March 2022.

Another survey showed factory orders fell 3.6% in

January, compared to estimates of a 2.9% decline.

Traders see a 67.2% chance of the first rate cut this year

arriving in June, as per CME Group's FedWatch tool.

An AI-fueled rally on Wall Street ran out of steam at

the start of this week as focus turns to fresh cues on the Fed's

monetary policy path after signs of sticky inflation in February

dampened hopes of early interest rate cuts.

The benchmark S&P 500 hit a fresh intraday record

high on Monday before closing slightly lower in the run up to

Powell's testimony before lawmakers on Wednesday and Thursday.

"I think he's going to continue to reiterate that the

narrative is going to be rate cuts may be coming (but) there's

no immediate plan to cut them. Thus you see some of the angst in

the tech space," said Ken Polcari, chief market strategist at

Slatestone Wealth.

Apple ( AAPL ) slid 2.8% after a research report showed

iPhone sales in China fell 24% year-on-year in the first six

weeks of 2024 as the U.S. company faced increased competition

from domestic rivals such as Huawei.

Other megacap growth and technology stocks also declined,

with Tesla down 3.3% after its European Gigafactory

near Berlin halted production after a suspected arson attack.

Six of the 11 major S&P 500 sub-indexes declined in early

trading, with rate-sensitive sectors such as technology

leading losses.

A raft of employment data, including the crucial nonfarm

payrolls report, is also due in the coming days.

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

was down 194.04 points, or 0.50%, at 38,795.79, the S&P 500

was down 31.07 points, or 0.61%, at 5,099.88, and the

Nasdaq Composite was down 209.02 points, or 1.29%, at

15,998.49.

Target ( TGT ) jumped 11.7% after the big-ticket

retailer forecast annual comparable sales largely above

estimates, betting on same-day services, product launches and a

new membership program to boost spending.

Microstrategy ( MSTR ) shed 6.8% after the bitcoin

development company announced a private offering for $600

million in convertible senior notes, with proceeds to be used to

buy bitcoin.

Advancing issues outnumbered decliners by a 1.31-to-1 ratio

on the NYSE. Declining issues outnumbered advancers for a

1.44-to-1 ratio on the Nasdaq.

The S&P index recorded 38 new 52-week highs and four new

lows, while the Nasdaq recorded 53 new highs and 62 new lows.