US STOCKS-Wall St drops as focus shifts to Fed rate decision

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Shares of Apple, other megacaps weigh

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TuSimple drops as CEO ousted

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Global Payments down on weak forecast

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Indexes down: Dow 0.39%, S&P 0.69%, Nasdaq 0.94%

(Updates prices, comment)

By Amruta Khandekar

Oct 31 (Reuters) -

U.S. stocks fell on Monday, potentially stalling a two-week rally in the S&P 500 and the Nasdaq indexes, as investors turned cautious ahead of the Federal Reserve's rate-setting meeting this week.

A policy decision from the Fed is due on Wednesday, with investors expecting a fourth straight 75-basis point interest rate hike to curb decades-high inflation.

Hopes about the central bank easing its aggressive stance on interest rate hikes had buoyed equities over the last few weeks, but communication from Fed officials after the decision as well as non-farm payrolls data this week would be key in setting expectations for future interest rates.

"If that is (Fed pivot) in fact the take away from Wednesday's meeting commentary, there would be further upside to equity markets from the rally that we had," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Apple Inc dropped 1.4%. A Reuters report said production of its iPhones could slump by as much as 30% next month due to tightening COVID-19 curbs in China.

Shares of Amazon.com and Google-owner Alphabet were also down 1.4% and 1.5%, respectively.

Among S&P 500 sectors, information technology and communication services were the lead decliners, falling 1.2% and 1.5%, respectively.

Energy stocks reversed gains after the White House said U.S. President Joe Biden, who has expressed outrage at oil companies making record profits while Americans pay high fuel prices, will make a statement on the issue later in the day.

Energy firms such as Chevron and Exxon Mobil have blown past profit estimates this quarter, benefiting from surging energy prices, as opposed to Big Tech firms that have largely disappointed investors.

Meanwhile, gains in shares of health insurer UnitedHealth and some financial companies limited declines on the Dow, which is poised to see its biggest monthly rise in over four decades depending on the day's moves.

"What you've been seeing is money has been migrating away from technology into non tech sectors that've given you better earnings in the last two weeks," James said.

With around half of the companies in the S&P 500 having reported their quarterly results so far, the third-quarter earnings growth estimate for the index has been slightly revised down to 4% from 4.1% last week, according to Refinitiv.

Meanwhile, traders' bets of a 50 basis point rate hike in December stood at 44.6%, according to CME Group's Fedwatch tool.

At 12:41 a.m. ET, the Dow Jones Industrial Average was down 129.55 points, or 0.39%, at 32,732.25, the S&P 500 was down 26.74 points, or 0.69%, at 3,874.32, and the Nasdaq Composite was down 104.66 points, or 0.94%, at 10,997.79.

Among single stocks, TuSimple Holdings plunged 46.8% after the trucking firm said its board terminated its chief executive officer.

Global Payments Inc fell 6.7% after the company forecast full-year revenue below estimates.

Declining issues outnumbered advancers for a 1.21-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.12-to-1 ratio on the Nasdaq.

The S&P index recorded 22 new 52-week highs and seven new lows, while the Nasdaq recorded 101 new highs and 79 new lows. (Reporting by Amruta Khandekar and Sruthi Shankar in Bengaluru; Editing by Maju Samuel and Anil D'Silva)