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Semis down for the week

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Adobe drops after dour Q2 revenue forecast

(Updates to 1600 ET)

By Caroline Valetkevitch

NEW YORK, 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 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 on the

day, with Microsoft ( MSFT ) among the biggest drags.

An index of semiconductors was down for the week.

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."

According to preliminary data, the S&P 500 lost 33.06

points, or 0.64%, to end at 5,117.42 points, while the Nasdaq

Composite lost 152.66 points, or 0.96%, to 15,975.86.

The Dow Jones Industrial Average fell 185.58 points, or

0.48%, to 38,720.08.

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.

The week started with investors' options positions

leaning toward call contracts - typically bought to express a

bullish bias, said Brent Kochuba, founder of analytic service

SpotGamma. However, the S&P 500's failure to rise quickly eroded

the value of upside call options, putting further downward

pressure on the market, he noted.

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

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

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

after forecasting full-year profit below Wall Street estimates,

as elevated supply-chain costs and increased promotions hurt its

margins.