US STOCKS-Wall St dips after manufacturing data, Google falls

Mon Jun 2, 2014 10:42am EDT

* Dow, S&P 500 come off fourth month of gains

* Google shares fall, weighing on tech sector

* Broadcom rallies, may sell cellular baseband business

* Indexes down: Dow 0.1 pct, S&P 0.3 pct, Nasdaq 0.6 pct (Updates to open, adds economic data and analyst comment)

By Ryan Vlastelica

NEW YORK, June 2 (Reuters) - U.S. stocks edged lower on Monday, falling from record levels as a weaker-than-expected read on manufacturing gave traders an excuse to sell.

The losses were slight but broad, with all ten of the S&P 500's primary sectors lower on the day, led by tech shares, which fell 0.5 percent.

Equities have been strong lately, with the Dow and S&P ending a fourth straight monthly rise in May and the Nasdaq up for its third straight week last week. However, recent trading has been marked by anemic volume, suggesting the rise has lacked conviction.

Wall Street opened with slight gains but turned lower after data showed that the pace of manufacturing growth had unexpectedly slowed in May. A separate read on construction spending showed less growth than expected in April.

"It is disconcerting that stocks have been doing so well while they have such low volume and data isn't showing the kind of growth we want," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "While there aren't other places for investors to go that look attractive, stocks seem high at these levels."

Investors continue to watch the yield of the U.S. Treasury 10-year note, which remains near an 11-month low. Low yields could help boost dividend-paying stocks, including in the telecom and utility sectors.

The CBOE Volatility index popped 6.5 percent but continues to hover around lows not seen since March 2013. That the so-called "fear index" is so low has many, including officials at the Federal Reserve, concerned the market is complacent.

Google Inc pressured tech shares, falling 2.5 percent to $557.83. A censorship watchdog said the company's services were being disrupted in China ahead of this week's 25th anniversary of the 1989 crackdown on pro-democracy demonstrators around Beijing's Tiananmen Square.

The Dow Jones industrial average fell 20.19 points, or 0.12 percent, to 16,696.98, the S&P 500 lost 5.17 points, or 0.27 percent, to 1,918.4 and the Nasdaq Composite dropped 24.38 points, or 0.57 percent, to 4,218.24.

Broadcom Corp was the S&P 500's biggest percentage gainer and the most active stock on the Nasdaq, jumping 8.5 percent to $34.56 after it said it was looking to sell or wind down its cellular baseband business.

Ariad Pharmaceuticals Inc rose 5.9 percent to $6.83 in heavy volume a day after saying its drug ponatinib showed anti-tumor activity in patients with advanced gastrointestinal stromal tumors.

Protective Life Corp rose 12 percent to $58.48 following news that Japanese insurer Dai-ichi Life Co was in advanced talks to buy the company.

Apple Inc will be in focus going into the company's annual Worldwide Developers' Conference, though the tech titan is not expected to announce any new product categories. The stock dipped 0.6 percent to $629.32. (Editing by Bernadette Baum)

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