*

PCE rises 2.3% in October on annual basis

*

Dell, HP fall after downbeat quarterly forecasts

*

Q3 GDP unrevised at 2.8%; weekly jobless claims at 213,000

*

Indexes down: Dow 0.24%, S&P 500 0.33%, Nasdaq 0.61%

(Adds mid-session data)

By Johann M Cherian, Purvi Agarwal and Saeed Azhar

Nov 27 (Reuters) -

Wall Street's main indexes fell on Wednesday, with the

Nasdaq leading declines as technology stocks slumped on

Thanksgiving eve on worries the Federal Reserve may be cautious

about rate cuts after stubbornly strong U.S. inflation data.

Data showed

consumer spending increased solidly

in October, suggesting the U.S. economy maintained its

strong pace of growth early in the fourth quarter, but progress

on lowering inflation appeared to have stalled.

Traders added to bets the Fed will lower borrowing costs by

25 basis points at its December meeting, according to CME's

FedWatch. However, they anticipate the central bank leaving

rates unchanged at its January and March meetings.

Investors were still gauging the impact of President-elect

Donald Trump's pledge on Monday to impose duties of 25% on

imports from Mexico and Canada and 10% on Chinese goods unless

they halt flows of the deadly opioid fentanyl and illegal

migrants into the U.S.

Goldman Sachs said in a note this week an escalation in

tariff policy risks delaying the return to 2.0% inflation

target.

At 01:56 p.m. the Dow Jones Industrial Average fell

107.54 points, or 0.24%, to 44,752.77, the S&P 500 lost

20.04 points, or 0.33%, to 6,001.59 and the Nasdaq Composite

lost 116.33 points, or 0.61%, to 19,059.24.

Dell fell 11.8% with HP down 6.2% after

downbeat quarterly forecasts, weighing on the Information

Technology sector, which led sectoral declines and

lost 1.3%.

The sentiment spread to megacaps such as Nvidia ( NVDA )

and Microsoft ( MSFT ), which dropped 1.9% and 0.8%

respectively, while the Philadelphia SE Semiconductor Index

slid 2% to hit its lowest in more than two months.

The Russell 2000 index, which hit a record high

earlier in the week, eked out a 0.14% gain.

Investors also assessed data earlier in the day which

showed the economy

grew

at a solid clip in the third quarter, while weekly jobless

claims

fell

again last week, leaving the door open for another

interest-rate cut from the Federal Reserve in December.

"Inflation has proven to be a little stickier than the

Fed would have liked, which may give them pause with respect to

cutting rates," said Scott Welch, chief investment officer at

Certuity.

"There are questions around the effects of Trump's

stated tariff policy, which, if implemented could be pretty

inflationary and so the Fed is going to have to balance itself

between the economic data and the incoming administration's

policy agenda."

Minutes from the Fed's November meeting, released on

Tuesday, showed policymakers were uncertain about the outlook

for interest-rate cuts and how much the current rates were

restricting the economy.

The benchmark S&P 500 is on track for its biggest one-month

rise in a year and its sixth month of gains out of seven, as

markets price in the probability of Trump's policies benefiting

local businesses and the overall economy.

Among others, Workday lost 4.7% after forecasting

fourth-quarter subscription revenue below expectations, hit by

weaker client spending on its human capital management software.

Advancing issues outnumbered decliners by a 1.78-to-1 ratio

on the NYSE. There were 350 new highs and 45 new lows on the

NYSE.

The S&P 500 posted 78 new 52-week highs and no new lows

while the Nasdaq Composite recorded 122 new highs and 61 new

lows.