US STOCKS-Dow, S&P 500 erase losses after ISM correction

Mon Jun 2, 2014 3:40pm EDT

* Dow, S&P 500 eke out records again, but volume is light

* ISM corrects May factory data after hours of confusion

* Apple, Google shares weigh on Nasdaq

* Dow up 0.1 pct; S&P 500 up 0.02 pct; Nasdaq off 0.2 pct (Updates to late afternoon)

By Angela Moon

NEW YORK, June 2 (Reuters) - The Dow and the S&P 500 inched higher late Monday afternoon, recovering from earlier losses after a closely watched read on U.S. manufacturing was revised to show more strength than initially indicated.

After hours of confusion, the Institute for Supply Management officially corrected its earlier report to show that the pace of growth in the U.S. manufacturing sector accelerated in May.

Wall Street fell after the first report, with all 10 S&P 500 sector indexes down for the day at one point, though stocks subsequently rebounded. Material shares turned higher, up 0.4 percent.

"People are still looking for signs that the economy is recovering, and the first ISM number had people questioning the strength of the economy," said John Carey, portfolio manager at Pioneer Investment Management in Boston.

"This revision gives us more reason to be confident, and it isn't surprising to see stocks recover a bit."

The ISM said its index of national factory activity rose to 55.4 last month from 54.9 in April, with the May figure just shy of the 55.5 expected by a Reuters poll of economists. The ISM had initially said the reading came in at 53.2, but it was corrected due to an error in applying the seasonal adjustments.

The Dow Jones industrial average rose 18.40 points or 0.11 percent, to 16,735.57. The S&P 500 gained 0.36 of a point or 0.02 percent, to 1,923.93. But the Nasdaq Composite dropped 9.78 points or 0.23 percent, to 4,232.84.

Both the Dow Jones industrial average and the S&P 500 touched intraday records on Monday, though volume was still slight, suggesting a lack of conviction behind the advance.

The CBOE Volatility Index popped up 2.7 percent but still hovered around lows not seen since March 2013. The drop in the VIX, the so-called "fear index," to such a low level has many, including officials at the Federal Reserve, concerned that the market is complacent.

Apple shares slid 1.2 percent to $625.02 on Monday after the tech giant introduced new operating systems for its Mac computers and mobile devices at the company's annual Worldwide Developers' Conference.

Google Inc also pressured tech shares, falling 1.3 percent to $564.38. 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.

Broadcom Corp was the S&P 500's biggest percentage gainer and the Nasdaq's second-most active stock, jumping 9.2 percent to $34.80 after the chipmaker said it was looking to sell or wind down its cellular baseband business.

Ariad Pharmaceuticals Inc shares rose 7.3 percent to $6.93 in heavy volume a day after saying its drug ponatinib showed anti-tumor activity in patients with advanced gastrointestinal stromal tumors.

Trading volume was at 3.6 billion shares on U.S. exchanges with less than 30 minutes left in the regular session, according to data from BATS Global Markets. (Reporting by Angela Moon; Editing by Jan Paschal)