S&P 500, Nasdaq rise as growth stocks bounce

S&P 500, Nasdaq rise as growth stocks bounce

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* U.S. composite PMI at lowest since February 2021

* Zoom tumbles on weak forecast

* Macy's shares rise on earnings beat

* Indexes mixed: Dow slips 0.06%, S&P up 0.18%, Nasdaq gains 0.40%

By Bansari Mayur Kamdar and Devik Jain

Aug 23 (Reuters) - The S&P 500 and the Nasdaq advanced in choppy trading on Tuesday, helped by megacap growth and technology stocks as yields slipped from one-month highs hit in the previous session, while weak business activity data raised concerns about economic growth.

U.S. private-sector business activity contracted for a second straight month in August to its weakest in 18 months, with particular softness in the services sector as demand weakened in the face of inflation and tighter financial conditions.

The S&P Global flash composite purchasing managers index for August dropped to 45 this month, the lowest since February 2021, from a final reading of 47.7 in July. A reading below 50 indicates a contraction in activity.

Supporting growth stocks, U.S. Treasury yields slipped a day after the 10-year yield scaled past 3% for the first time since July 21.

High-growth stocks such as Amazon.com Inc AMZN.O and Tesla Inc TSLA.O rose 0.5% each in early trading.

Wall Street closed sharply lower in the past two sessions as investor focus turned to a Fed gathering later this week in Jackson Hole, where central bank Chair Jerome Powell is expected to reinforce a strong commitment to stamp out inflation running at four-decades high.

"The market has been wrong that we're close to a pivot point by the Fed," said Chris Grisanti, chief equity strategist at MAI Capital Management.

"I expect Powell to be more hawkish than current consensus expects. He will once again reiterate that their primary goal is to defeat inflation, he is not there to support the equity markets or the bond market. The market yesterday was a reflection of that fears."

After a rough start to the year, markets rallied since mid-June on hopes inflation has peaked but the summer rally snapped last week on renewed fears around an aggressive monetary policy tightening path by the Fed.

Traders remain split between a 50-basis point and a 75-basis point hike by the central bank at its meeting next month, though economists polled by Reuters expect a 50-basis point hike.

At 10:00 a.m. ET, the Dow Jones Industrial Average .DJI was down 18.75 points, or 0.06%, at 33,044.86, the S&P 500 .SPX was up 7.26 points, or 0.18%, at 4,145.25, and the Nasdaq Composite .IXIC was up 49.09 points, or 0.40%, at 12,430.66.

Energy stocks .SPNY rose 3.8%, leading gains among the 11 major S&P 500 sectors, tracking the jump in crude prices as tight supply moved back into focus.

Macy's Inc M.N rose 5.6% on beating quarterly profit estimates, while Palo Alto Networks Inc PANW.O gained 11.0% after the cybersecurity firm posted upbeat quarterly results and announced a stock split plan.

Zoom Video Communications Inc ZM.O tumbled 11.5% after the pandemic favorite cut its annual profit and revenue forecasts.

Advancing issues outnumbered decliners for a 1.97-to-1 ratio on the NYSE and a 1.82-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 30 new lows, while the Nasdaq recorded 18 new highs and 66 new lows.
Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta