Wall Street slips after rally, markets eye cautious Fed
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Adobe up after lifting full-year revenue forecast
Arm shares gain as stock to join Nasdaq 100 index
US consumer sentiment ebbs in June; inflation worries linger
Dow set to fall on the week
Indexes off: Dow 0.77%, S&P 0.42%, Nasdaq 0.10%
Updated at 10:06 a.m. ET/1406 GMT
By Lisa Pauline Mattackal and Johann M Cherian
June 14 (Reuters) - U.S. stocks slipped on Friday, with the S&P 500 and Nasdaq indexes taking a breather after consecutive sessions of record highs, as investors weighed hawkish Federal Reserve projections against the backdrop of a cooling economy.
Limiting losses on the tech-heavy Nasdaq, Adobe ADBE.O jumped 14.9 %, on track to mark its biggest one-day jump in four years after the company raised its annual revenue forecast on more demand for its artificial intelligence-powered software.
Markets have persisted with expectations of a September start to policy easing - seeing an over 70% chance of a cut at that meeting, as per the CME's FedWatch tool - while traders are pricing in two cuts by year-end. FEDWATCH
However, that clashed with thecentral bank's own forecasts released on Wednesday, wherepolicymakers dialedback their projectionsfor three cuts this year to just one.
"Investors think the Fed's data was already somewhat out of date," said Ross Mayfield, investment strategy analyst at Baird, referring to softer consumer price inflation data earlier in the week.
Cleveland Fed President Loretta Mester said the trend lower is good news for the economy and the central bank.
Hopes of easing Fed policy, combined with megacaps' strength, have seen major indexes rally, with the S&P 500 and the Nasdaq on pace for their seventh week of gains out of eight.
However, this has raised some concerns about the sustainability of equity strength, especially if economic recession risks grow, with the blue-chip Dow on track to end the week lower.
"The market is also just pricing in a probability, even if it's a small one, of a second half recession where the Fed has to cut rates a lot," Mayfield said.
Adding to the gloom, a preliminary University of Michigan survey showed a Consumer Sentiment Index slipped to 65.6 in June, sharply lower than expectations of 72.
At10:06 a.m. ET, the Dow Jones Industrial Average .DJIwas down 298.48 points, or 0.77%, at 38,348.62, the S&P 500 .SPXwas down 22.72 points, or 0.42%, at 5,411.02, and the Nasdaq Composite .IXICwas down 17.10 points, or 0.10%, at 17,650.46.
Nine of the 11 S&P 500 sectors were in declines, led by a 1.8 % slide in industrials .SPLRCI, and the economically sensitive small-cap Russell 2000 index .RUT lost 1.6 %.
Among others, Broadcom AVGO.O extended Thursday's gains with a2.2% rise after announcing an upbeat forecast and a 10-for-one stock split.
Sirius XM SIRI.O slipped 1.2% after the Nasdaq said the stock would be removed from the Nasdaq 100 index, and replaced with Arm Holdings ARM.O. Shares of Arm rose 4.9%.
Comments from Chicago Fed President Austan Goolsbee and Fed Governor Lisa Cook are also expected on Friday.
A BofA Global Research report showed U.S. value stock funds saw $2.6 billion of outflows, while investors poured $1.8 billion into U.S. growth stock funds in the week to Wednesday.
Declining issues outnumbered advancers for a 3.49-to-1 ratio on the NYSE and for a 2.81-to-1 ratio on the Nasdaq .
The S&P index recorded four new 52-week highs and 14 new lows, while the Nasdaq recorded 14 new highs and 110 new lows.
Fund flows: U.S. equity sector funds Fund flows: U.S. equity sector funds https://tmsnrt.rs/40SDRqx
Reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Maju Samuel
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