Written by Ankika Biswas and Lisa Pauline Matkal
(Reuters) – U.S. stock indexes were flat on Thursday, as investors weighed a series of economic data ahead of the Federal Reserve’s closely watched inflation report, while Micron Inc and drugstore chain Walgreens Boots Alliance fell on disappointing forecasts.
Data showed that new orders for major manufactured capital goods in the United States unexpectedly fell in May, while orders for core durable goods fell 0.1% versus expectations for a 0.2% rise, raising hopes that the weakness of the economy will push the Federal Reserve (central bank) US) to cut interest rates in September.
Weekly unemployment claims fell to 233,000, missing expectations of 236,000. Moreover, the final edition showed that US economic growth increased more than expected in the first quarter.
“We are slowing down, but we are not collapsing,” said Robert Pavlik, portfolio manager at Dakota Wealth Management. “So we continue to move forward. I think one or two rate cuts are probably necessary, and I would like to see that before the end of this year.”
Thursday’s data comes a day before the release of the monthly personal consumption expenditures price index – the Federal Reserve’s preferred measure of inflation.
Megacap shares rose as U.S. Treasury yields fell after the data, with Alphabet Inc., Microsoft Corp. and Meta Platforms Inc. all up 0.6% to 1%. Amazon.com Inc. rose 1.2% after its market value hit $2 trillion for the first time on Wednesday.
Communications services and real estate led gains among major sector indices in the S&P 500, while consumer staples were the biggest decliners.
Meanwhile, Micron stock fell 6.5% after consensus fourth-quarter revenue forecasts disappointed investors who had hoped for more upside from the memory chip maker’s performance in the artificial intelligence boom.
Nvidia stock fell 2.3%, continuing its recent turbulent journey.
Walgreens Boots Alliance shares fell 24.6% after cutting its 2024 earnings outlook and announcing plans to close more underperforming U.S. stores.
Jeans maker Levi Strauss shares fell 16% after it missed expectations for second-quarter revenue.
At 11:41 a.m. ET, the Dow Jones Industrial Average was up 59.28 points, or 0.15%, at 39,187.08, the S&P 500 was down 6.15 points, or 0.11%, at 5,471.75 and the Nasdaq Composite was down 17.06 points, or 0.10%, at 17,788.10.
With a handful of expensive, heavy-weighted stocks fueling Wall Street’s rise since the final stretch of 2023, market participants have highlighted concerns about the sustainability of the rally and called for the need to diversify their portfolios to hedge against potentially steep losses.
Meanwhile, investors largely stuck to their view of two rate cuts this year, according to LSEG’s FedWatch data, even though the Fed expected just one cut, with a 60% chance of a cut in September.
In a policy op-ed, Atlanta Fed President Rafael Bostic said inflation “appears to be narrowing” and this should allow interest rates to be cut later this year.
Furthermore, President Joe Biden and former President Donald Trump are scheduled to face each other in the first debate of the day.
Advancing issues outnumbered declining stocks by a ratio of 1.34 to 1 on the New York Stock Exchange and by a ratio of 1.23 to 1 on the Nasdaq.
The S&P recorded eight new 52-week highs and two new lows, while the Nasdaq recorded 28 new highs and 86 new lows.
(Reporting by Ankika Biswas and Lisa Matkal in Bengaluru; Editing by Maju Samuel)