US STOCKS-Wall Street mixed as Microsoft drags tech, data in focus

By Johann M Cherian and Pranav Kashyap

Dec 3 (Reuters) - Wall Street's main indexes were mixed in choppy trading on Wednesday, with Microsoft pulling the tech sector lower, while investors parsed a slew of economic indicators to gauge the Fed's policy outlook.

Microsoft MSFT.O fell nearly 3% after a report said the tech giant had cut AI software sales quotas after many sales staff missed their targets in the fiscal year that ended in June.

The broader tech sector .SPLRCT was down 0.7%, the biggest decliner on the S&P 500, while most of the other 10 sectors traded higher.

Shares of chip companies such as Nvidia NVDA.O slipped 0.4%, while Broadcom AVGO.O lost 1.7%.

"Anything that puts a dent in the image of Microsoft and its leadership position in AI certainly is going to have an impact," said Art Hogan, chief market strategist at B. Riley Wealth.

Meanwhile, U.S. services activity held steady in November, a survey showed. For investors, the focus was on prices paid by services firms, which eased only slightly from the previous month. The data landed just ahead of Friday's personal consumption expenditures report, the Fed's preferred inflation gauge.

Separately, the ADP National Employment Report showed U.S. private payrolls unexpectedly declined in November. With official employment reports for October and November due only after next week's decision, the market is leaning more than usual on private-sector data.

Traders' expectations for a 25-basis-point cut at next week's Fed meeting rose to 89% after the data, up from around 87% earlier in the day, CME's FedWatch Tool showed.

At 10:09 a.m. ET, the Dow Jones Industrial Average .DJI rose 123.43 points, or 0.26%, to 47,597.89, the S&P 500 .SPX slipped 0.72 points, or 0.01%, to 6,828.65 and the Nasdaq Composite .IXIC lost 51.55 points, or 0.22%, to 23,362.12.

A report that the Trump administration had abruptly canceled interviews with finalists for the Fed chair role firmed up the view that Kevin Hassett - seen as a U.S. interest rate cutter - will replace Jerome Powell next May.

Marvell Technology jumped 6.7% after the chipmaker said it will buy semiconductor startup Celestial AI in a deal worth $3.25 billion and gave a bullish forecast for its next fiscal year.

Microchip Technology rose 8.7% after the chipmaker raised its expectations for third-quarter net sales and earnings per share, driven by strong bookings.

American Eagle Outfitters raised its annual comparable sales forecast, betting on marketing-driven demand for its apparel and accessories during the holiday season, sending its shares up 14%.

Crypto stocks such as Strategy MSTR.O and Bit Digital BTBT.O gained 2.2% and 1.3%, respectively, as bitcoin BTC= recovered 1.6% and touched a two-week high.

CrowdStrike fell 2.2% after reporting quarterly results and forecasts.

Advancing issues outnumbered decliners by a 2.2-to-1 ratio on the NYSE and by a 1.83-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and no new lows, while the Nasdaq Composite recorded 43 new highs and 68 new lows.