US STOCKS-S&P 500 edges up; tech weighs on Nasdaq

* Utilities, telecom in favor as tech lags

* Durable goods orders for May fall unexpectedly

* Fed’s Williams, Dudley bat for higher U.S. interest rates

* Dow up 0.18 pct, S&P up 0.13 pct, Nasdaq down 0.18 pct
(Updates to late afternoon, adds commentary, changes byline)

By Sinead Carew

June 26 (Reuters) – The S&P 500 and the Dow were slightly
higher on Monday but gains were muted by a fall in technology
stocks which nudged the Nasdaq lower as investors turned to more
defensive sectors.

The slow-growing, high-dividend S&P utilities and
telecommunications were the best performers among the
11 S&P sectors.

Technology stocks, which have been under pressure as
investors worry about stretched valuations, hit a session low in
late afternoon trading.

“The bond market is signaling an economic slowing,” said
Paul Nolte, portfolio manager at Kingsview Asset Management in
Chicago. “That’s why you’re seeing defensive names like
utilities do well, because equity investors are buying more in
line with what that bond market is saying.”

The Dow Jones Industrial Average was up 39.35 points,
or 0.18 percent, to 21,434.11, the S&P 500 gained 3.12
points, or 0.13 percent, to 2,441.42 and the Nasdaq Composite
dropped 11.12 points, or 0.18 percent, to 6,254.13.

A fall in Microsoft, Amazon and Alphabet
weighed most on the S&P as well as the Nasdaq.

“It’s simply profit-taking going into the end of the
quarter. I wouldn’t be surprised at all to see that reversed in
early July with the thought that we’re going to see some strong
earnings,” said Tim Ghriskey, chief investment officer of
Solaris Asset Management in New York.

The utilities and the four-company telecommunications
services sector index were the S&P’s best performers with gains
of more than 0.8 percent.

The S&P energy was lower as investors worried about
a relentless rise in U.S. supply and a surge in demand for short
sale contracts, or bets against higher crude prices.

The recent drop in oil prices has spurred concerns about low
inflation, which remains below the Federal Reserve’s 2 percent
target rate.

The Fed raised rates this month for the second time this
year and has indicated it could raise them again but futures
imply only a 50 percent chance of another rate hike by December.

The financial index rose 0.6 percent after a string
of Fed policymakers appeared to back another rate hike this year
despite a patch of recent weak economic data.

San Francisco Fed President John Williams said the Fed needs
to raise rates gradually or the economy runs the risk of
overheating.

New York Fed chief William Dudley said recent narrowing of
credit spreads, record stock prices and falling bond yields
could encourage the Fed to continue tightening U.S. policy.

Data on Monday showed new orders for key U.S.-made capital
goods unexpectedly fell in May, with non-defense orders
excluding aircraft – a closely watched proxy for business
spending plans – dropping 0.2 percent.

Economists polled by Reuters had expected a rise of 0.3
percent.

Advancing issues outnumbered declining ones on the NYSE by a
2.18-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored advancers.
(Additional reporting by Caroline Valetkevitch in New York,
Tanya Agrawal in Bengaluru,; Editing by Arun Koyyur and Nick
Zieminski)

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