Wall Street closes subdued as investors sit, wait for inflation data

June 27 (Reuters) – US stocks ended Thursday around the unchanged mark as investors awaited fresh inflation data, with the Nasdaq able to eke out a slight gain after economic data showed a continued slowdown in economic activity, raising investors’ hope for rate cuts.

“The market is in a bit of a holding pattern here for the PCE because there hasn’t been a lot of big catalysts,” said Ross Mayfield, investment strategy analyst at Baird, about the release of the monthly personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred inflation gauge – on Friday.

Data showed new orders for key US-manufactured capital goods unexpectedly fell in May, while core durable goods orders fell 0.1% versus forecasts for a 0.2% rise, boosting investor beliefs that a weaker economy could prompt the Federal Reserve to cut interest rates in September.

Weekly jobless claims fell to 233,000, missing expectations of 236,000. Further, a final print showed the US economic growth increased more than estimated in the first quarter.

Benchmark 10- and 2-year yields, which move inversely to prices, dropped after the data showed a continued, but moderated slowdown in economic activity, while the 7-year yields edged lower after a USD 44 billion auction.

Megacap stocks, such as Alphabet and Meta Platforms, firmed as US Treasury yields slipped. Amazon.com rose after hitting USD 2 trillion in market value for the first time on Wednesday.

According to preliminary data, the S&P 500 gained 5.44 points, or 0.07%, to end at 5,483.34 points, while the Nasdaq Composite gained 51.99 points, or 0.30%, to 17,857.14. The Dow Jones Industrial Average rose 42.07 points, or 0.11%, to 39,169.87.

Micron fell after an in-line fourth-quarter revenue forecast disappointed investors hoping for more upside from the memory chipmaker’s performance in the artificial intelligence boom.

Nvidia fell, continuing its recent turbulent ride.

Walgreens Boots Alliance slumped after cutting its 2024 profit forecast and announcing plans to close more underperforming US stores.

Denim maker Levi Strauss tumbled after falling short of expectations for second-quarter revenue.

With a handful of expensive heavily weighted stocks supporting Wall Street’s ascent since the last leg of 2023, market participants have highlighted concerns over the rally’s sustainability and have called out for the need to diversify portfolios to hedge against possible sharp losses.

Meanwhile, investors have largely stuck to their view of around two rate cuts this year, as per LSEG’s FedWatch data, even though the Fed has projected only one, and a 59.5% chance of a cut in September.

In a policy essay, Atlanta Fed President Raphael Bostic said inflation “appears to be narrowing” and that should allow rates cuts later this year, while governor Michelle Bowman reiterated that she is still not ready to support a central bank rate cut with inflation pressures still elevated.

“What we’ve been looking forward for most of the week is kind of that preponderance of evidence to tip the scales on what is the direction for inflation,” said Rob Haworth, senior investment strategist at US Bank Wealth Management.

Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel and Aurora Ellis