*

Semis on track for weekly loss

*

Adobe drops after dour Q2 revenue forecast

*

Indexes down: Dow 0.4%, S&P 500 0.6%, Nasdaq 0.8%

(Updates to 1430 ET)

By Caroline Valetkevitch

March 15 (Reuters) -

U.S. stocks fell on Friday, led by technology-related

megacaps that have propelled this year's rally, while investors

weighed the interest rate outlook ahead of next week's Federal

Reserve meeting.

Traders have reined in bets of a June rate cut by the

Fed after this week's hotter-than-expected inflation data.

Shares of Adobe dropped more than 13% after it

forecast second-quarter revenue below analysts' estimates,

following stiff competition and weak demand for its artificial

intelligence-integrated photography, illustration and video.

The S&P 500 technology index was down 1.2%,

with shares of Microsoft ( MSFT ) falling more than 2%.

An index of semiconductors fell slightly, on

track to its biggest weekly percentage drop since early January.

The Nvidia GTC developer conference scheduled for March 18 to 21

will be watched closely for AI-related announcements.

"We seem in a period here where everyone knows rates

eventually will be lowered. The expectation of when it happens

keeps getting slightly pushed back, but investors still believe

it will happen," said Rick Meckler, partner at Cherry Lane

Investments in New Vernon, New Jersey.

"It's been a back-and-forth market as people reposition

and consider whether some of the real winners have just gone a

little bit too far, so you're seeing them trade off."

The Dow Jones Industrial Average fell 156.5

points, or 0.4%, to 38,749.16. The S&P 500 lost 28.24

points, or 0.55%, at 5,122.24 and the Nasdaq Composite

dropped 127.79 points, or 0.79%, to 16,000.74.

While Wall Street's AI-driven rally has stalled, the S&P

500 remains up about 7% for the year to date.

Friday also marked the simultaneous expiry of quarterly

derivatives contracts tied to stocks, index options and futures,

also known as "triple witching," which can boost trading volumes

and exacerbate volatility.

Among data released on Friday, production at U.S. factories

increased more than expected in February, but the January figure

was revised sharply down as manufacturing remains hamstrung by

higher interest rates.

Also, the University of Michigan's preliminary reading on

the overall index of consumer sentiment came in at 76.5 this

month, versus an estimated reading of 76.9.

All eyes are now on next week's Fed meeting and any clues on

the central bank's outlook for rate cuts.

Among other declining shares, Ulta Beauty ( ULTA ) fell 4.1%

after forecasting full-year profit below Wall Street estimates,

as elevated supply-chain costs and increased promotions hurt its

margins.

Advancing issues outnumbered decliners on the NYSE by a

1.00-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored advancers.

The S&P 500 posted 26 new 52-week highs and no new lows;

the Nasdaq Composite recorded 46 new highs and 116 new lows.

(Additional reporting by Bansari Mayur Kamdar and Shashwat

Chauhan in Bengaluru; Editing by Pooja Desai and Richard Chang)