US STOCKS-U.S. stocks mixed as traders eye potential pause in rate hikes

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Indexes: S&P 500 -0.03%, Nasdaq +0.10%, Dow -0.38%

(Updates prices throughout; adds fresh analyst comment)

By Noel Randewich and Shristi Achar A

June 5 (Reuters) -

U.S. stocks were mixed on Monday, as Apple Inc hit a record high and investors weighed whether the Federal Reserve may pause its interest rate hikes at its upcoming policy meeting.

Apple was up 0.9% after the world's most valuable company revamped its lineup of desktop and laptop Macs using its own processor chips ahead of its expected announcement of its first mixed-reality headset. Earlier it rose as much as 2.2% to a record high.

Other heavyweight growth stocks also rose, with Alphabet Inc gaining 1.5% and Tesla adding 2% after the electric vehicle maker's sales of China-made cars in China jumped in May.

U.S. stocks rallied on Friday after a report showed that wage growth moderated in May, raising bets that the central bank could skip a rate hike next week, while investors welcomed a Washington deal that avoided a catastrophic debt default.

Reinforcing expectations the Fed could pause its rate hikes, a survey from the Institute for Supply Management showed the U.S. services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed's fight against inflation.

Traders have priced in a nearly 80% chance that the Fed will hold interest rates at its June 13-14 policy meeting, according to CME Group's FedWatch tool, although they expect another hike in July.

"That bad news is good news in terms of the Fed. The bad news, meaning weak economic reports, is actually good news because it makes it more likely the Fed will pause its series of interest rate hikes, believing they have begun to do their trick bringing inflation down," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

A stronger-than-expected earnings season and expectations the Fed could pause its aggressive monetary tightening cycle have boosted U.S. equity markets in recent months. The S&P 500 was up earlier in Monday's session, briefly on track to close 20% above its October 2022 closing lows.

The S&P 500 was last down 0.03% at 4,280.95 points.

The Nasdaq gained 0.10% to 13,253.86 points, while the Dow Jones Industrial Average was down 0.38% at 33,634.67 points.

Palo Alto Networks Inc climbed 5.5% as the cybersecurity firm looks set to replace Dish Network in the S&P 500 index. Dish shares fell 1.0%.

Big U.S. banks slipped after the Wall Street Journal reported that U.S. regulators were preparing to tighten rules for large banks, which could include raising their capital requirements by 20% on average.

Of the 11 S&P 500 sector indexes, six declined, led lower by industrials, down 0.59%, followed by a 0.5% loss in financials.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio.

The S&P 500 posted 16 new highs and three new lows; the Nasdaq recorded 85 new highs and 38 new lows. (Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Marguerita Choy)