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Dow Jones falls to lowest since May 2

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Airlines fall after American Airlines ( AAL ) cuts profit forecast

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Fed's Beige Book due at 2:00 p.m. ET

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Indexes down: Dow 0.90%, S&P 0.62%, Nasdaq 0.44%

(Updated at 11:51 a.m. ET/ 1551 GMT)

By Johann M Cherian and Lisa Pauline Mattackal

May 29 (Reuters) - Wall Street indexes retreated on

Wednesday, led by declines in rate-sensitive sectors as concerns

around the timing and the scale of the Federal Reserve's

interest rate cuts pushed Treasury yields higher and pressured

risky assets.

The blue-chips Dow led declines, falling to its

lowest in nearly one month, while all S&P 500 subsectors were in

the red, with real estate, financials and

utilities down between 0.8% and 1.5%.

The yield on the benchmark 10-year U.S. Treasury note hit

four-week highs at 4.6%, extending Tuesday's gains after a

survey showed consumer confidence unexpectedly improved in May,

though inflation worries persisted.

Conflicting expectations on the size and the timing of

interest rates have kept the market on edge since the start of

this year.

Sticky inflation and hawkish comments from central bankers

have forced traders to temper down rate cut expectations to only

one by November or December, per the CME FedWatch Tool, from

multiple cuts expected at the start of the year.

"It's going to be a hard fought battle to get inflation to

the 2% target," said Dylan Kremer, chief investment officer at

Certuity.

"But we do see the trend continuing to get closer to the

target over the next six to 12 months that could potentially

give the Fed some wiggle room for a few interest rate cuts in

the back half of the year."

The central bank's Beige Book, due at 2:00 p.m. ET on

Wednesday, is expected to throw light on the state of the U.S.

economy. Markets will also monitor comments from Fed

policymakers including New York President John Williams and

Raphael Bostic.

But the main focus this week is on Friday's release of

April's Personal Consumption Expenditure data - the Fed's

preferred inflation gauge.

At 11:51 a.m., the Dow Jones Industrial Average fell

348.51 points, or 0.90%, to 38,504.35, the S&P 500 lost

32.77 points, or 0.62%, to 5,273.27 and the Nasdaq Composite

lost 75.58 points, or 0.44%, to 16,944.30.

The tech-heavy Nasdaq retreated after closing above

the 17,000 mark for the first time on Tuesday, while the

small-caps Russell 2000 index also lost 1.2%.

Marathon Oil ( MRO ) advanced 8.1% after ConocoPhillips ( COP )

said it would buy the company in an all-stock deal for a

little over its $15 billion market value. ConocoPhillips ( COP ) lost

3.8%, dropping to the bottom of the energy sector that

lost 1.8%.

Airline stocks fell, led by American Airlines ( AAL ), which

declined 14.6% after the company cut its second-quarter profit

forecast.

DICK'S Sporting Goods jumped 16.4% after lifting

forecasts for annual sales and profit, while Abercrombie & Fitch ( ANF )

rose 18.9% on raised annual sales growth forecast.

Salesforce ( CRM ) and HP Inc ( HPQ ) are set to report

quarterly results after markets close.

Declining issues outnumbered advancers by a 6.03-to-1 ratio

on the NYSE and by a 2.73-to-1 ratio on the Nasdaq.

The S&P 500 posted six new 52-week highs and 14 new lows,

while the Nasdaq Composite recorded 29 new highs and 111 new

lows.

(Reporting by Johann M Cherian and Lisa Pauline Mattackal in

Bengaluru; Editing by Shinjini Ganguli)