US STOCKS-Wall St falls as deadlocked debt ceiling talks stoke default concerns

(Updates prices throughout to open; adds details on S&P Global Flash PMI, shares of Broadcom, BJ's Wholesale)

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US May business activity hits 13-month high - S&P Global

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Debt limit talks to continue on Tuesday

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Indexes dip: Dow 0.16%, S&P 0.23%, Nasdaq 0.17%

By Shreyashi Sanyal and Shristi Achar A

May 23 (Reuters) - Wall Street indexes fell on Tuesday as talks over increasing the U.S. debt limit stretched to another round, keeping investors jittery on prospects of an unprecedented government default.

White House and congressional Republican negotiators will meet again later in the day to discuss how to raise the $31.4 trillion debt ceiling, with just nine days left for the deadline.

This comes after President Joe Biden and House Speaker Kevin McCarthy could not reach an agreement about the debt ceiling in their meeting a day earlier, but vowed to keep talking. McCarthy said on Tuesday that a debt ceiling deal with the White House was not imminent.

Trading on the S&P 500 index was stuck in a 30-point range in the last two sessions as U.S. debt ceiling talks lingered, while a megacaps-led bounce on the Nasdaq helped it close the previous day higher.

"The markets have had some nice rallies over the past weeks and the debt ceiling talks are an excuse to be cautious here," said Peter Cardillo, chief market economist at Spartan Capital Securities

"The real reason for stalling the advance is the yields that continue to rise."

Worries over the debt limit pushed yields on one-month Treasury bills to record highs at 5.888%.

Helping limit losses, the S&P Global data showed U.S. business activity rose to a 13-month high in May, lifted by strong growth in the services sector.

The report was the latest indication that the economy held its momentum early in the second quarter despite rising risks of a recession.

The Commerce Department's April personal consumption expenditure (PCE) index reading, the Fed's preferred inflation gauge, is due on Friday.

Broadcom Inc advanced 1.3% after the chipmaker entered into a multi-billion-dollar deal with Apple Inc to use chips made in the United States. Apple shares fell 0.8%.

Among retail earnings, Lowe's Companies Inc cut its annual comparable sales forecast, as demand dwindles for home improvement goods. Lowe's reverse coursed to gain 2.4%.

BJ's Wholesale Club Holdings Inc dropped 6.6% after the warehouse club operator missed first-quarter revenue estimates.

At 9:57 a.m. ET, the Dow Jones Industrial Average was down 52.83 points, or 0.16%, at 33,233.75, the S&P 500 was down 9.67 points, or 0.23%, at 4,182.96, and the Nasdaq Composite was down 21.97 points, or 0.17%, at 12,698.81.

Zoom Video Communications fell 5.7% after the video conferencing platform recorded its slowest quarterly revenue growth.

Shares of regional lenders extended gains from the previous session, led by a 19.7% rise in PacWest Bancorp.

Western Alliance Bank, Zions Bancorp, KeyCorp and First Horizon Corp rose between 2% and 4.6%.

Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE, while advancing issues outnumbered decliners by a 1.25-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and one new low, while the Nasdaq recorded 43 new highs and 31 new lows. (Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru Editing by Vinay Dwivedi)