US STOCKS-Wall St lower as tech selloff outweighs bank gains

* U.S. economy grew 1.4 pct in Q1 vs prior reading of 1.2
pct

* Tech sector on track to post biggest monthly drop in a
year

* Rite Aid plunges after Walgreens terminates deal

* Indexes down: Dow 0.15 pct, S&P 0.29 pct, Nasdaq 0.88 pct
(Adds details, changes comment, updates prices)

By Ankur Banerjee and Tanya Agrawal

June 29 (Reuters) – Wall Street dipped in late morning
trading on Thursday as a selloff in technology stocks outweighed
gains in the financial sector.

Tech stocks, which have led the S&P 500’s record run this
year, pulled back recently after some investors questioned the
sector’s high valuations and shifted to defensive sectors.

The S&P tech index led the laggards among the 11
sectors, with the index on track to post its biggest monthly
loss in a year.

Apple, which fell 1.2 percent, was the biggest drag
on all the three major indexes, while Alphabet and
Microsoft were among the top three drags on the Nasdaq
and the S&P.

However, the financial sector, which rose 1.29
percent, limited the slide.

Shares of the top six U.S. banks rose after the Federal
Reserve cleared them in the second part of its annual stress
test, allowing them to raise dividend payouts and share
buybacks.

“Part of the reason why tech is down today is the steam in
the recent rotation out of some of big tech winners and into
banks,” said Michael Scanlon, portfolio manager at Manulife
Asset Management in Boston.

“The catalyst for that rotation today is the really strong
stress test results coupled with higher treasury rates this
morning and a positive GDP revision, leading investors to move
into financial which has underperformed this year.”

The financial index has grown 6.6 percent this year,
underperforming the 9 percent rise in the S&P.

At 10:54 a.m. ET (1454 GMT), the Dow Jones Industrial
Average was down 32.17 points, or 0.15 percent, at
21,422.44, the S&P 500 was down 7.3 points, or 0.29
percent, at 2,433.39.

The Nasdaq Composite was down 54.77 points, or 0.88
percent, at 6,179.65.

Earlier in the day, data showed the U.S. economy slowed less
sharply in the first quarter than initially estimated due to
unexpectedly higher consumer spending and a bigger jump in
exports.

Benchmark 10-year U.S. Treasury yields rose to
five-week highs in sympathy with weaker European government
debt, as investors evaluated the likelihood that central banks
in Europe will soon become less accommodative.

Oil prices rose to a two-week high, extending the rally into
the sixth straight session, after a decline in weekly U.S.
production eased concerns about deepening oversupply.

The energy sector was among the two gainers on the S&P,
rising 0.89 percent.

Among stocks, Rite Aid slumped 24.5 percent after
Walgreens Boots Alliance terminated its agreement to buy
the drug store chain and said it would instead buy nearly half
of its stores for $5.18 billion.
(Reporting by Ankur Banerjee and Tanya Agrawal in Bengaluru;
Editing by Arun Koyyur)

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