Indexes are a mixed bag as investors weigh inflation data

By Abigail Summerville

NEW YORK (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 (NYSE: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 (NASDAQ:ZS) 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 48 new highs and 82 new lows.