S&P 500 ends lower as traders eye potential pause in rate hikes

• Palo Alto Networks gains on S&P 500 index inclusion

• Apple hits record high ahead of developer conference Updates with details of end of session

The S&P 500 ended lower on Monday as investors weighed whether the U.S. Federal Reserve might pause its interest rate hikes at its upcoming policy meeting, while Apple briefly hit a record high before losing ground.

Apple Inc AAPL.O ended lowerafter the world's most valuable company revamped its lineup of desktop and laptop Macs using its own processor chips ahead of its expected announcement of its first mixed-reality headset. Earlier Apple rose as much as 2.2% to an all-time high.

Other heavyweight growth stocks were mixed, with Nvidia Corp NVDA.O giving back some of its recent gains and TeslaInc TSLA.O adding as much as 3.4% after theelectric vehicle maker's sales of China-made cars in China jumped in May.

The S&P 500 on Friday closed at its highest level in over nine months after a report showed that wage growth moderated in May.

Following a stronger-than-expected earnings season and expectations the Fed could pause its aggressive monetary tightening cycle, the S&P 500 is up nearly 20% from its closing low in October, lifted by gains in heavyweight tech stocks including Apple, Nvidia and Microsoft Corp MSFT.O.

Reinforcing expectations the Fed could pause its rate hikes, a survey from the Institute for Supply Management showed the U.S. services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed's fight against inflation.

“That bad news is good news in terms of the Fed. The bad news, meaning weak economic reports, is actually good news because it makes it more likely the Fed will pause its series of interest rate hikes, believing they have begun to do their trick bringing inflation down,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

Traders have priced in a nearly 80% chance that the Fed will hold interest rates at its June 13-14 policy meeting, according to CME Group's FedWatch tool, although they expect another hike in July.

Unofficially, the Dow Jones Industrial Average .DJI fell 200.16 points, or 0.59%, to 33,562.6, the S&P 500 .SPX lost 8.62 points, or 0.20%, to 4,273.75 and the Nasdaq Composite .IXIC dropped 11.34 points, or 0.09%, to 13,229.43.

Palo Alto Networks Inc PANW.O climbed, with the cybersecurity firm set to replace Dish Network Corp DISH.O in the S&P 500 index on June 20.Dish shares fell.

Big U.S. banks slipped after the Wall Street Journal reported that U.S. regulators were preparing to tighten rules for large banks, which could include raising their capital requirements by 20% on average.