US STOCKS-Nasdaq confirms correction as Facebook, Alphabet, Amazon drag

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* Facebook, Amazon, Alphabet tumble on fears of regulatory
risks
* U.S. manufacturing activity unexpectedly slows last month
* Healthcare boosted by Amgen, Gilead, Merck
* Dow up 0.02%, S&P 500 down 0.28%, Nasdaq off 1.61%

(Updates to close)
By Sinéad Carew
New York June 3 (Reuters) - The Nasdaq tumbled 1.6% on
Monday, confirming a correction as it was dragged down by
Alphabet, Facebook and Amazon.com on fears the companies are the
targets of U.S. government antitrust regulators.
While the sell-off in the internet heavyweights was the
biggest drag on the Nasdaq, the index has been falling steadily
since its May 3 record closing high as investors worried about
slowing global growth amid an escalating U.S.-China trade war.
The S&P 500 had a volatile session and ended the day down
0.3 percent, but the Dow Jones Industrial Average .DJI ended
the session virtually unchanged.
"The slump has been concurrent with fears of slowing global
growth," said Bucky Hellwig, senior vice president at BB&T
Wealth Management in Birmingham, Alabama. He noted that weak
manufacturing data around the world appeared to be confirming
those fears.
"Right now Nasdaq is basically where we were at the lows in
March. This is an important level to hold here. If we break
below that, we fall further. Tomorrow will be an important day
to see if the trend continues lower."
The Dow Jones Industrial Average .DJI rose 4.74 points, or
0.02%, to 24,819.78, the S&P 500 .SPX lost 7.61 points, or
0.28%, to 2,744.45 and the Nasdaq Composite .IXIC dropped
120.13 points, or 1.61%, to 7,333.02 which was 10.2% lower than
its May 3 close.
A correction is defined as a 10 percent drop from the most
recent 52-week high.
The benchmark S&P 500 .SPX swung in and out of negative
territory during the day as investors monitored the latest
comments around the U.S. trade battles with both China and
Mexico, as well as U.S. President Donald Trump's decision on
Friday to end preferential trade treatment for India.
"We're surprised the market didn't take a sourer tone today
not only with China digging in, the Mexico headlines and the
U.S. revoking India's status as a developing country," said John
Augustine, chief investment officer at Huntington National Bank
in Columbus, Ohio. He also cited weak manufacturing data.
"Investors must be thinking in some form that this is as bad
as the headlines and economic reports are going to get this
week," Augustine said.
An ISM survey showed U.S. manufacturing growth unexpectedly
slowed in May, driving demand for the safety of government
bonds. Two-year yields US2YT=RR hit their lowest since
September 2017 on growing conviction that the Federal Reserve
will start cutting interest rates to stave off a
recession. High-profile internet stocks dominated trading, with
Facebook Inc FB.O closing down 7.5% after the Wall Street
Journal reported that the Federal Trade Commission has secured
the right to examine how the social media company's practices
affect digital competition. The stock was on pace for its
biggest one-day drop since July 26. Alphabet Inc GOOGL.O tumbled 6% after sources told Reuters
the U.S. Justice Department is preparing an investigation to
determine if the Google parent broke antitrust laws. Amazon.com
AMZN.O fell 4.6% on a report that the e-commerce giant could
be put under the watch of the FTC. The communication services sector .SPLRCL , which includes
Google and Facebook, closed down 2.8%, the biggest drop of the
S&P's 11 major sectors, while Amazon shares helped pull the
consumer discretionary sector .SPLRCD down 1.2%.
The S&P materials sector .SPLRCM was the biggest
percentage gainer of the S&P's major sectors, with a 3.4%
advance. Dupont's 11.5% gain accounted for roughly half of the
sector's rise in the first trading session after it spun off its
Corteva Inc CTVA.K agriculture business.
Healthcare was one bright spot for the Nasdaq, with the
Nasdaq biotech index .NBI climbing 1.2%, helped by shares of
companies including Amgen Inc AMGN.O and Gilead GILD.O .
Amgen and Merck & Co MRK.N reported positive drug data at the
annual American Society of Clinical Oncology meeting in Chicago.
Amgen jumped 3.4% after its drug showed a high response rate
in a small lung and colon cancer trial, while Merck rose 1.3%
after data showed nearly a quarter of patients who received
immunotherapy Keytruda as an initial treatment for advanced lung
cancer were still alive after five years. The S&P 500 posted 17 new 52-week highs and 21 new lows; the
Nasdaq Composite recorded 24 new highs and 170 new lows.
On U.S. exchanges 8.34 billion shares changed hands compared
with the 7.11 billion average for the last 20 sessions.