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Most chip stocks advance, megacap stocks mixed

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AT&T ( T ) down after reporting data leak

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Indexes down: Dow 0.64%, S&P 0.30%, Nasdaq 0.05%

(Updated at 12:27 p.m. ET/ 1628 GMT)

By Shristi Achar A and Shashwat Chauhan

April 1 (Reuters) -

Wall Street's main stock indexes turned lower in midday

trading on Monday as stronger-than-expected manufacturing data

propped up Treasury yields and tempered expectations of a rate

cut in June by the U.S. Federal Reserve.

The

Institute for Supply Management's

(ISM) manufacturing PMI for March rose to above 50 for the

first time since September 2022 from 47.8 in the previous month.

"The ISM manufacturing index surprised everyone by

moving into growth territory for the first time since late 2022

with production jumping, new orders rising and inflation

pressures increasing," said James Knightley, chief international

economist at ING.

"Markets interpreted that as reducing the chances of

meaningful Fed rate cuts, but construction was much weaker and

there are a lot of jobs numbers still to come."

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

rose to 4.3311%, touching its highest level in two

weeks and weighing on rate-sensitive stocks.

Investors pared their rate cut bets, with money markets

pricing in about a 56% chance of at least a 25 basis point cut

in June, compared with nearly 66% earlier in the day, according

to the CME Group's FedWatch tool.

Markets also digested the Commerce Department's data on

Friday that showed the personal consumption expenditures (PCE)

price index - the Fed's preferred inflation gauge - rose 0.3% in

February, compared with the estimates of a 0.4% increase,

according to economists polled by Reuters.

Fed Chair Jerome Powell said on Friday that the latest U.S.

inflation data was "along the lines of what we would like to

see," but said since the economy was on a "strong" footing,

"that means we don't need to be in a hurry to cut."

Megacap growth stocks - whose cash flows are typically

discounted in a higher interest rate regime - were mixed, with

Alphabet up 2.7% and notching a fresh record high,

while Tesla, Apple ( AAPL ) and Nvidia ( NVDA ) slipped

between 0.6% and 2.0%.

Most major S&P 500 sectors were trading lower, with

rate-sensitive sectors such as real estate and

utilities among the worst hit.

The sessions' losses follow the benchmark S&P 500's

best first quarter since 2019 last week, driven by

optimism around artificial intelligence, robust earnings and

hopes of a soft landing - where inflation moderates without

causing an economic slowdown.

At 12:27 p.m. ET, the Dow Jones Industrial Average

was down 254.12 points, or 0.64%, at 39,553.25, the S&P

500 was down 15.74 points, or 0.30%, at 5,238.61, and the

Nasdaq Composite was down 8.33 points, or 0.05%, at

16,371.12.

The Philadelphia Semiconductor Index gained 1.5%,

with chipmakers like Micron Technology ( MU ), and Marvell

Technology ( MRVL ) rising 7.1% and 3.6%, respectively.

AT&T ( T ) fell 1.2% after the wireless carrier said it was

investigating a data leak that could have impacted nearly 73

million current and former accounts.

Declining issues outnumbered advancers for a 2.15-to-1

ratio on the NYSE and for a 1.97-to-1 ratio on the Nasdaq.

The S&P index recorded 32 new 52-week highs and 1 new lows,

while the Nasdaq recorded 77 new highs and 57 new lows.

(Reporting by Shristi Achar A and Shashwat Chauhan in

Bengaluru; Editing by Anil D'Silva)