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Adobe up after lifting full-year revenue forecast

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Arm shares gain as stock to join Nasdaq 100 index

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US consumer sentiment ebbs in June; inflation worries

linger

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Dow set to fall on the week

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Indexes off: Dow 0.77%, S&P 0.42%, Nasdaq 0.10%

(Updated at 10:06 a.m. ET/1406 GMT)

By Lisa Pauline Mattackal and Johann M Cherian

June 14 (Reuters) -

U.S. stocks slipped on Friday, with the S&P 500 and Nasdaq

indexes taking a breather after consecutive sessions of record

highs, as investors weighed hawkish Federal Reserve projections

against the backdrop of a cooling economy.

Limiting losses on the tech-heavy Nasdaq, Adobe

jumped

14.9

%, on track to mark its biggest one-day jump in four years

after the company

raised its annual revenue forecast

on more demand for its artificial intelligence-powered

software.

Markets have persisted with expectations of a September

start to policy easing - seeing an over 70% chance of a cut at

that meeting, as per the CME's FedWatch tool - while traders are

pricing in two cuts by year-end.

However, that clashed with the central bank's own

forecasts released on Wednesday, where policymakers dialed back

their projections for three cuts this year to just one.

"Investors think the Fed's data was already somewhat out

of date," said Ross Mayfield, investment strategy analyst at

Baird, referring to softer consumer price inflation data earlier

in the week.

Cleveland Fed President Loretta Mester said

the trend lower is good news

for the economy and the central bank.

Hopes of easing Fed policy, combined with megacaps'

strength, have seen major indexes rally, with the S&P 500 and

the Nasdaq on pace for their seventh week of gains out of eight.

However, this has raised some concerns about the

sustainability of equity strength, especially if economic

recession risks grow, with the blue-chip Dow on track to end the

week lower.

"The market is also just pricing in a probability, even if

it's a small one, of a second half recession where the Fed has

to cut rates a lot," Mayfield said.

Adding to the gloom, a preliminary University of

Michigan survey showed a Consumer Sentiment Index slipped to

65.6 in June, sharply lower than expectations of 72.

At 10:06 a.m. ET, the Dow Jones Industrial Average

was down 298.48 points, or 0.77%, at 38,348.62, the S&P 500

was down 22.72 points, or 0.42%, at 5,411.02, and the

Nasdaq Composite was down 17.10 points, or 0.10%, at

17,650.46.

Nine of the 11 S&P 500 sectors were in declines, led by

a

1.8

% slide in industrials, and the economically

sensitive small-cap Russell 2000 index lost

1.6

%.

Among others, Broadcom ( AVGO ) extended Thursday's gains

with a 2.2% rise after announcing an upbeat forecast and a

10-for-one stock split.

Sirius XM slipped 1.2% after the Nasdaq said the

stock would be removed from the Nasdaq 100 index, and replaced

with Arm Holdings. Shares of Arm rose 4.9%.

Comments from Chicago Fed President Austan Goolsbee and

Fed Governor Lisa Cook are also expected on Friday.

A BofA Global Research report showed U.S. value stock funds

saw $2.6 billion of outflows, while investors poured $1.8

billion into U.S. growth stock funds in the week to Wednesday.

Declining issues outnumbered advancers for a 3.49-to-1 ratio

on the NYSE

and

for a 2.81-to-1 ratio on the Nasdaq

.

The S&P index recorded four new 52-week highs and

14

new lows, while the Nasdaq recorded

14

new highs and

110

new lows.