* Micron falls on lowered revenue forecast
* Semiconductor stocks drop for third session
* Novavax tumbles after cutting revenue view by half (Adds final closing market prices)
By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 9 (Reuters) - The Nasdaq closed down on Tuesday after a dismal forecast from Micron Technology pulled chip makers and tech stocks lower as investors await U.S. inflation data that could lead the Federal Reserve to further tighten its efforts to curb inflation.
High inflation numbers on Wednesday, following last week's blowout jobs report, would likely stop the Fed from easing interest rates hikes anytime soon and halt the market's rally off mid-June lows.
Traders see a 68.5% chance of the Fed raising rates by 75 basis points in September, in what would be its third big hike in a row.
Adding to concerns of a tight labor market and runaway inflation, data on Tuesday showed an acceleration of unit labor costs in the second quarter, which suggested strong wage pressures will help keep inflation elevated.
Unit labor costs - the price of labor per single unit of output - rose at a 10.8% rate, following a 12.7% rate of growth in the first quarter, the Labor Department said.
"We're still seeing wage pressure building, using last Friday's job data as a gauge," said Jimmy Chang, chief investment officer at Rockefeller Global Family Office.
Chang remains cautious about the market's outlook. "I don't think it's going to be a set of numbers that will change the Fed’s policy course," he said.
Inflation at the moment is primarily supply driven, so the traditional central bank playbook of tightening rates to crimp demand will not be as effective as previous cycles, said Jean Boivin, head of the BlackRock Investment Institute.
"We're going to see central banks being surprised by inflation. They will have to sound hawkish on the back of this," Boivin told the Reuters Global Markets Forum.
The Dow Jones Industrial Average fell 58.13 points, or 0.18%, to 32,774.41, while the S&P 500 lost 17.59 points, or 0.42%, to 4,122.47 and the Nasdaq Composite dropped 150.53 points, or 1.19%, to 12,493.93.
Volume on U.S. exchanges was 10.64 billion shares, compared with the 10.94 billion average for the full session over the past 20 trading days.
Seven of the 11 major S&P 500 sectors fell, led by a 1.5%decline in consumer discretionary. Value stocks closed flat, while the growth index slid 0.8%.
The jobs data from last Friday eroded some of the bullish arguments that the Fed would "pivot" to a neutral policy stance, followed by rate cuts early next year, Chang said.
"You have some strategists and technicians capitulating, saying the bottom is behind us, this is a new bull market now," he said. "Typically in a bear market, a summer rally is not unusual."
Micron Technology Inc slid 3.7% after the memory-chipmaker cut its current-quarter revenue forecast and warned of negative free cash flow in its next quarter as demand wanes for chips in PCs and smartphones.
Micron's dismal forecast, a day after Nvidia Corp warned of weakness in its gaming business, knocked the Philadelphia Semiconductor index down 4.57%, its biggest single-day decline since June 16 as all 30 components fell. The index has lost 7% the past three days.
President Joe Biden signed a sweeping bill to provide $52.7 billion in subsidies for U.S. semiconductor production and research, a measure that gained bipartisan support to combat China's investment in technology.
"It's utterly discounted," said Michael Shaoul, chief executive officer at Marketfield, on why chip stocks were unfazed by the bill.
Rate-sensitive growth and technology stocks slipped as U.S. Treasury yields climbed.
Despite a choppy recovery, the benchmark S&P 500 is down 13.5% this year after hitting a record high in early January as surging consumer prices, hawkish central banks and geopolitical tensions weigh.
Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to Refinitiv data as of Friday.
Occidental Petroleum rose 4.0% after Warren Buffett's Berkshire Hathaway increased its stake to 20.2% of outstanding shares. Occidental's shares have more than doubled in price this year.
U.S. vaccine maker Novavax slumped 29.6% after it halved its annual revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States amid a global supply glut and soft demand.
Declining issues outnumbered advancing ones on the NYSE by a 1.91-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 30 new lows; the Nasdaq Composite recorded 42 new highs and 66 new lows.
(Reporting by Herbert Lash in New York and Bansari Mayur Kamdar in Bengaluru; Additional reporting by Aniruddha Ghosh in Bengaluru; Editing Arun Koyyur, Shounak Dasgupta and Lisa Shumaker)