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US STOCKS-Wall Street ends mixed; Salesforce selloff pressures Dow

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Salesforce (CRM) drops on co-CEO exit plan

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Dollar General (DG) falls on slashing annual profit view

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U.S. manufacturing shrinks for first time in 2-1/2 years in Nov

(New throughout, updates to close of trading session)

By Ankika Biswas and Noel Randewich

Dec 1 (Reuters) - Wall Street ended mixed on Thursday as a selloff in Salesforce (CRM) weighed on the Dow, while traders digested U.S. data that suggested the Federal Reserve's interest rate hikes are working.

On Wednesday, the S&P 500 surged over 3% on optimism the Fed might moderate its campaign of interest rate hikes.

U.S. manufacturing activity shrank in November for the first time in 2-1/2 years as higher borrowing costs weighed on demand for goods, data showed, evidence the Fed's rate hikes have cooled the economy.

The personal consumption expenditures (PCE) price index rose 0.3%, the same as in September, and over the 12 months through October the index increased 6.0% after advancing 6.3% the prior month.

Excluding the volatile food and energy components, the PCE price index rose 0.2%, one-tenth less than expected, after gaining 0.5% in September.

"On a normal day, the package of data this morning would be pretty risk-on, but after the rally yesterday, I think it's not quite good enough to push another leg higher," said Ross Mayfield, an investment strategy analyst at Baird.

Wednesday's rally drove the S&P 500 index above its 200-day moving average for the first time since April after Fed Chair Jerome Powell said it was time to slow the pace of interest rate hikes.

Traders now see a 79% chance the Fed will increase its key benchmark rate by 50 basis points in December and a 21% chance it will hike rates by 75 basis points.

Salesforce Inc (CRM) tumbled after the software maker said Bret Taylor would step down as co-chief executive officer in January.

Dollar General Corp (DG) fell after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp (COST) dropped after the membership-only retail chain reported slower sales growth in November.

According to preliminary data, the S&P 500 lost 2.31 points, or 0.06%, to end at 4,077.80 points, while the Nasdaq Composite gained 15.22 points, or 0.13%, to 11,483.21. The Dow Jones Industrial Average fell 193.24 points, or 0.56%, to 34,397.42.

A report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended Nov. 26.

Investors now await nonfarm payrolls data on Friday for clues about how rate hikes have affected the labor market.

With a month left in 2022, the S&P 500 is down about 14% year to date, and the Nasdaq has lost about 27%. (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio)

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