Wall Street eases amid rate concerns, higher bond yields
Dow Jones falls to lowest since May 2
Airlines fall after American Airlines cuts profit forecast
Fed's Beige Book shows continued economic expansion
Indexes down: Dow 1.04%, S&P 0.64%, Nasdaq 0.42%
Updates to 2:30 p.m. ET
By Abigail Summerville
NEW YORK, May 29 (Reuters) -U.S. stocks fell on Wednesday amid further gains in Treasury yields and concern over the timing and scale of possible interest rate cuts from the Federal Reserve.
The Dow fell to its lowest level in nearly a month, while rate-sensitive utilities .SPLRCU were among S&P 500 sectors with the biggest declines.
The yield on the benchmark 10-year U.S. Treasury note hit four-week highs at 4.6%, extending Tuesday's gains, after weak debt auctions.
"Today’s stock market action is primarily about what’s going on in the fixed income space, with yields pushing higher... It's consistent with when this has happened a few times - as rate expectations have been repriced, it causes some indigestion in the stock market temporarily," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
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.
Stocks held their losses following the release of a U.S. Fed survey. It showed U.S. economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace.
The main focus this week will be on Friday's release of April's Personal Consumption Expenditure data - the Fed's preferred inflation gauge.
The Dow Jones Industrial Average .DJI fell 402.30 points, or 1.04%, to 38,450.56, the S&P 500 .SPX lost 33.79 points, or 0.64%, to 5,272.25 and the Nasdaq Composite .IXIC lost 71.14 points, or 0.42%, to 16,948.74.
The Nasdaq retreated after closing above the 17,000 mark for the first time on Tuesday, while the small-caps Russell 2000 index .RUT was down 1.4%.
Marathon Oil MRO.N advanced 7.7% after ConocoPhillips COP.N said it would buy the company in an all-stock deal for a little over its $15 billion market value. ConocoPhillips lost 4%, dropping to the bottom of the energy sector .SPNY that lost 1.3%.
Airline stocks fell, led by American Airlines AAL.O, which declined 14.7% after the company cut its second-quarter profit forecast.
Dick'sSporting Goods DKS.N jumped 15.2%after lifting forecasts for annual sales and profit, while Abercrombie & Fitch ANF.N rose 23.7%on raised annual sales growth forecast.
Salesforce CRM.N and HP Inc HPQ.N are set to report quarterly results after the close.
Declining issues outnumbered advancers by a 5.85-to-1 ratio on the NYSEand by a 2.74-to-1 ratioon the Nasdaq.
The S&P 500 posted seven new52-week highs and 15 new lows, while the Nasdaq Composite recorded 42 new highs and 130new lows.
Reporting by Abigail Summerville in New York and Johann M Cherian and Lisa Pauline Mattackal in Bengaluru; Editing by Shinjini Ganguli and Aurora Ellis
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