June 4 (Reuters) - The S&P 500 and the Nasdaq slipped on Tuesday after the latest labor market data compounded worries about growing weakness in the world's largest economy.
Indexes initially pared gains after a Labor Department report showed job openings were down to 8.05 million in April, lower than an expectation of 8.35 million, ahead of the closely watched nonfarm payrolls figures for May, due on Friday.
Separately, the Commerce Department said orders for manufactured goods rose 0.7%, higher than economists' expectation of a 0.6% increase.
Following the data, yields on Treasury bonds slipped, with expectations for a September rate reduction standing at 66.66%, up from about 65% before the report, according to the CME's FedWatch tool.
Rate-sensitive megacap stocks including Nvidia (NVDA.O), opens new tab, Apple (AAPL.O), opens new tab, Meta (META.O), opens new tab and Microsoft (MSFT.O), opens new tab were among the biggest drags on the S&P 500 and were down between 0.6 % and 0.8 %.
Data on Monday showed U.S. factory activity had slowed more than expected in May and construction spending had dropped in April, weighing on stocks, although the S&P 500 and the Nasdaq closed the session slightly higher.
"The ISM manufacturing yesterday (indicated) a slowdown in growth or decrease in activity, and if we see a slowdown in nonfarm payrolls, that's going to be more of a warning sign," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
He also cited profit-taking and rotation away from megacaps as reasons for the decline.
"A number of stocks have gotten hit harder than the overall market, but those are the ones that have performed extremely well."
Broadly strong corporate earnings coupled with seemingly resilient economic growth kept Wall Street optimistic and buoyed stocks over several months. However, a string of recent data has given rise to worries, even as markets now expect an earlier start to rate cuts.
Oil companies Exxon Mobil (XOM.N), opens new tab and Chevron (CVX.N), opens new tab dropped 1.4% and 2.4%, respectively, as demand concerns weighed on crude prices. Energy stocks (.SPNY), opens new tab led S&P 500 sectoral declines with a 1.5 % fall.
At 10:18 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was up 74.32 points, or 0.19%, at 38,645.35, the S&P 500 (.SPX), opens new tab was down 10.99 points, or 0.21%, at 5,272.41, and the Nasdaq Composite (.IXIC), opens new tab was down 57.87 points, or 0.34%, at 16,770.80.
The blue-chip Dow, underpinned by healthcare stocks, eked out gains, while the rate-sensitive Russell 2000 Small-Caps Index (.RUT), opens new tab declined 0.7%.
Among others, Bath & Body Works (BBWI.N), opens new tab dropped 10.5% after a lower revision to its quarterly profit forecast.
Axos Financial (AX.N), opens new tab plunged 8.7% after Hindenburg Research disclosed a short position in the lender.
Paramount Global (PARA.O), opens new tab lost 2.7% after the streaming firm said it was exploring strategic options or a joint venture for the Paramount+ streaming service.
Declining issues outnumbered advancers for a 1.62-to-1 ratio on the Nasdaq and by a 1.39-to-1 ratio on the NYSE .
The S&P index recorded nine new 52-week highs and four new lows, while the Nasdaq recorded 21 new highs and 59 new lows.
Reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai
