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Most megacaps, chip stocks advance

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AT&T ( T ) down after reporting data leak

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Indexes: S&P up 0.11%, Nasdaq up 0.58%, Dow off 0.38%

(Updated at 10:02 a.m. ET/ 1402 GMT)

By Shristi Achar A and Shashwat Chauhan

April 1 (Reuters) -

The tech-heavy Nasdaq outpaced Wall Street peers on Monday

as megacap growth stocks gained on hopes of an early rate cut by

the U.S. Federal Reserve after the latest batch of data showed

signs of softening inflation.

The Commerce Department's data on Friday 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.

The report strengthened rate cut bets, with money markets

pricing in a 66% chance of at least a 25 basis point cut in

June, compared with 55% a day before the data was released,

according to the CME Group's FedWatch tool.

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" - comments that appeared to keep the central bank's

baseline for interest rate cuts this year intact.

Most megacap growth stocks - whose cash flows are typically

discounted in a higher interest rate regime - gained, with

Microsoft ( MSFT ), Nvidia ( NVDA ), Alphabet and

Amazon.com ( AMZN ) up between 0.8% - 2.6%.

Market participants, however, expect the central bank to

stand pat on rates at the upcoming policy meeting in May.

"There hasn't been a whole lot of movement around those

three (expected cuts). The market keeps waiting for data, keeps

waiting for the Fed to say things, but you're getting some

degree of mixed messages," said Thomas Martin, senior portfolio

manager at GLOBALT Investments.

"We're in the camp that they won't (cut) in June, but that

they will probably do three (sometimes) this year."

The gains on Wall Street have been powered by optimism

around artificial intelligence, robust earnings and hopes of a

soft landing - where inflation moderates without causing an

economic slowdown.

The benchmark S&P 500 advanced over 10% in the first

three months of the year, its biggest gain since 2019. At

current levels, the blue-chip Dow sits less than 1% away

from breaching the 40,000 level for the first time.

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

, however, rose to 4.3032%, touching its highest

level in a week and keeping gains in check.

On the data front, the S&P Global's final manufacturing PMI

report for March came in at 51.9, while the ISM manufacturing

March PMI came in at 50.3 against expectations of 48.5.

At 10:02 a.m. ET, the Dow Jones Industrial Average

was down 152.37 points, or 0.38%, at 39,655.00, the S&P 500

was up 5.74 points, or 0.11%, at 5,260.09, and the Nasdaq

Composite was up 94.21 points, or 0.58%, at 16,473.67.

Nine of the 11 major S&P 500 sectors were trading lower,

with utilities leading losses, down 1.0%, while

communication services jumped 1.4%.

The Philadelphia Semiconductor Index gained 2.4%,

with chipmakers like Micron Technology ( MU ), and Marvell

Technology ( MRVL ) rising 7.0% and 3.7%, respectively.

AT&T ( T ) fell 1.7% 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 1.42-to-1 ratio

on the NYSE and for a 1.33-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and one new low,

while the Nasdaq recorded 62 new highs and 21 new lows.

(Reporting by Shristi Achar A and Shashwat Chauhan in

Bengaluru; Editing by Anil D'Silva)