S&P 500, Nasdaq drop as investors weigh inflation data, tech drags

S&P 500, Nasdaq drop as investors weigh inflation data, tech drags

* US annual PCE inflation rises 2.7% YoY in April

* Dell plunges after lower current-quarter profit forecasts

* Trump Media falls in choppy trading after Trump conviction

* Indexes: Dow up 0.7%, S&P down 0.31%, Nasdaq loses 1.26%

NEW YORK, May 31 (Reuters) –

The S&P 500 and the Nasdaq eased on Friday, on track to
break their five-week winning streaks, as investors digested an
inflation report and assessed when the Federal Reserve might
begin cutting interest rates.

The technology sector led declines among the
S&P 500 sectors, falling 1.6%, followed by consumer
discretionary, which was down 1%.

An index of semiconductors was down 2.6%, while
shares of Dell plummeted 18% after it forecast
current-quarter profit below market estimates and signaled that
higher costs to build servers that meet heavy AI workloads would
dent its annual margins.

The U.S. personal consumption expenditures (PCE) price
index increased 0.3% last month, the Commerce Department’s
Bureau of Economic Analysis showed, matching the unrevised gain
in March.

Consumer spending slowed more than expected, the report
added.

“People were pleased that it wasn’t hotly surprising but
also underneath the surface, the consumer continues to show a
little bit of strain,” said Carol Schleif, chief investment
officer at the BMO family office in Minneapolis.

“It’s coming through when you look at the sector
performances in the market. … Consumer discretionary is down
at the bottom of the list of sector performers today.”

Traders of futures tied to the Fed policy rate added to
bets of roughly even odds that the central bank will begin to
cut rates in September and boosted the odds of a second rate cut
in December to about the same probability.

The Dow Jones Industrial Average rose 265.19 points,
or 0.70%, to 38,376.67. The S&P 500 lost 16.37 points, or
0.31%, at 5,219.11 and the Nasdaq Composite fell 210.73
points, or 1.26%, to 16,526.35.

Tech and chip stocks, which have led Wall Street’s
recent rally, retreated this week as a spike in Treasury yields
pressured riskier assets.

Among gainers, Zscaler jumped 7.1% after the security
solutions provider forecast fourth-quarter results above
estimates.

Gap surged 28.5% after the apparel maker raised its
annual sales forecast and its first-quarter results beat market
expectations, in fresh signs that its turnaround strategy was
starting to work.

Trump Media & Technology Group fell 5.3% after a New
York jury convicted former President Donald Trump of falsifying
documents to cover up a hush money payment to a porn star ahead
of the 2016 elections.

Advancing issues outnumbered decliners by a 2.03-to-1 ratio
on the NYSE and by a 1.24-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and six
new lows, while the Nasdaq recorded

4

8

new highs and 82 new lows.

(Reporting by Abigail Summerville in New York and Johann M
Cherian and Lisa Pauline Mattackal in Bengaluru; Additional
reporting by Pranav Kashyap; Editing by Pooja Desai and Richard
Chang)

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