NEW YORK: The Nasdaq and the S&P 500 inched up in choppy trading on Friday ahead of the long weekend, after signs of moderating price pressures strengthened bets for an interest-rate cut at the Federal Reserve’s upcoming meeting in September.
The Personal Consumption Expenditure index, the central bank’s preferred inflation gauge, rose 2.5% in July on an annual basis, compared to an estimate of 2.6%, according to economists polled by Reuters. On a monthly basis, it rose 0.2% as expected.
Among rate-sensitive megacaps, Amazon.com and Microsoft added 1.8% and 0.4%, respectively. Chip stocks also rose, with Broadcom climbing 2.3% and Advanced Micro Devices gaining 0.5%, aiding the Philadelphia SE Semiconductor index’s 1.5% rise.
Friday’s PCE report is the last one before the Fed’s September meeting and follows Chair Jerome Powell’s comments last week, when he expressed support for an imminent policy adjustment.
Odds of a 25-basis-point reduction stood at 67.5%, according to the CME Group’s FedWatch Tool, while those of a 50-bps reduction were at 32.5%.
“The data bakes in further that there is going to be a start to the rate-cutting cycle,” said Thomas Martin, senior portfolio manager at GLOBALT Investments.
Martin said investors remain focused on the labor market, with a slew of employment reports scheduled for the coming week.
Global markets are nearing the end of a tumultuous month for riskier assets, after signs of a sudden moderation in the labor market sparked recession fears in the United States in early August. The influence of the Japanese yen carry trade worsened the rout.
Risk-taking has improved since then, with the Dow hovering near record highs, as subsequent data including Thursday’s upward revision to economic growth soothed investor nerves.
At 11:42 a.m. ET, the Dow Jones Industrial Average was down 86.41 points, or 0.21%, at 41,248.64, the S&P 500 was up 6.36 points, or 0.11%, at 5,598.32, and the Nasdaq Composite was up 49.01 points, or 0.28%, at 17,565.44.
Most of the 11 S&P 500 sectors traded flat, but Consumer Discretionary bucked the trend with a 0.7% advance. Energy was the biggest laggard with a 0.6% drop, tracking lower oil prices.
The tech-focused Nasdaq and the S&P 500 closed lower on Thursday after Nvidia failed to match sky-high investor expectations, despite upbeat results and a broadly in-line forecast. The AI-chip bellwether was up 0.4% after a 6.4% drop in the previous session.
The benchmark S&P 500 and the Dow are set for monthly gains, while the Nasdaq is on track to end August lower, if losses hold.
Among other stocks, Marvell Technology jumped 7.9% after forecasting third-quarter results above estimates.
Ulta Beauty slid 3.0% after it trimmed its annual results forecasts, while Intel rose 9.2% following a report it was exploring options which could include a merger or a split.
Dell Technologies advanced 3.4% after lifting its annual revenue and profit forecasts.
Trading volumes are expected to thin ahead of the extended weekend due to the Labor Day holiday.
Declining issues outnumbered advancers for a 1.06-to-1 ratio on the NYSE, and by a 1.16-to-1 ratio on the Nasdaq.
The S&P index recorded 57 new 52-week highs and one new low, while the Nasdaq recorded 63 new highs and 51 new lows.
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