NEW YORK :Major stock indexes fell on Friday, with technology shares including Dell Technologies leading declines, while the dollar weakened against the euro after U.S. inflation data kept alive expectations of a September interest rate cut.
Dell dropped 8.9 per cent after it reported results late Thursday that included high manufacturing costs for artificial intelligence-optimized servers. Other AI-related shares fell in the broader tech selloff including Nvidia, down 3.3 per cent, and Broadcom, down 3.6 per cent. The Nasdaq fell more than 1 per cent and the S&P 500 technology index fell 1.6 per cent.
The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.2 per cent in July, versus an unrevised 0.3 per cent increase in June and matching the estimate of economists polled by Reuters.
In the 12 months through July, PCE inflation increased 2.6 per cent after climbing 2.6 per cent in June. Stripping out the volatile food and energy components, the so-called core PCE Price Index increased 0.3 per cent last month. That followed a 0.3 per cent rise in core inflation in June.
“You have to love it when a plan comes together. Today’s numbers on both the personal consumption, expenditure, and income, and spending, were right down the middle of the fairway,” Art Hogan, chief markets strategist for B. Riley Wealth in Boston, said via email.
“This leaves the door wide open for the Fed to cut rates in September and likely again in October and in December.”
Traders are now pricing in 89 per cent odds of a cut by the Federal Reserve next month, up from 84 per cent before the data.
Traders had increased bets on more cuts after Fed Chair Jerome Powell last Friday adopted an unexpectedly dovish tone.
The euro was last up 0.11 per cent at $1.1696. The dollar index, which measures the greenback against a basket of currencies, fell 0.09 per cent to 97.79.
The Dow Jones Industrial Average fell 92.02 points, or 0.20 per cent, to 45,544.88, the S&P 500 fell 41.60 points, or 0.64 per cent, to 6,460.26 and the Nasdaq Composite fell 249.61 points, or 1.15 per cent, to 21,455.55.
“Today is just weakness in the top of the market, in tech,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
For the month, the S&P 500 rose 1.9 per cent, the Dow rose 3.2 per cent and the Nasdaq added 1.6 per cent.
Major U.S. financial markets will be closed for the Labor Day holiday on Monday.
European shares closed lower, hitting their lowest in over two weeks, weighed down by British banks. Data released on Friday also showed French consumer prices rose slightly less than anticipated in August while Spain’s European Union-harmonized 12-month inflation rate was steady at 2.7 per cent.
MSCI’s gauge of stocks across the globe fell 4.77 points, or 0.50 per cent, to 951.57. The pan-European STOXX 600 index fell 0.64 per cent.
In Treasuries, longer-dated yields edged higher as traders closed positions ahead of the long weekend and repositioned for month-end. The yield on benchmark U.S. 10-year notes rose 1.6 basis points to 4.223 per cent.
The two-year note yield was last down 1.6 basis points on the day at 3.619 per cent. It has fallen 33 basis points this month, the most in a year.
Fed Governor Christopher Waller on Thursday said he wanted to start cutting interest rates next month and “fully expects” more rate cuts to follow, to bring the Fed’s policy rate closer to a neutral setting.
Investors are keen to see U.S. jobs data for August, which is due next Friday.
They also are watching for more news on U.S. President Donald Trump’s attempt to fire Fed Governor Lisa Cook.
A federal judge said on Friday she would set an expedited briefing schedule in Cook’s bid to temporarily block Trump from firing her while she pursues a lawsuit that says he has no valid reason to remove her.
Oil prices were lower. U.S. crude fell 59 cents to settle at $64.01 a barrel and Brent declined 50 cents to settle at $68.12. Spot gold rose 0.88 per cent to $3,446.75 an ounce.
