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 more than 9 per cent after reporting earnings late Thursday that included high manufacturing costs for AI-optimized servers. Other AI-related shares also fell in the broader tech selloff including Nvidia, down 3.5 per cent, and Broadcom, down 4.2 per cent. The Nasdaq was down more than 1 per cent.
The U.S. Commerce Department stated on Friday its Personal Consumption Expfinishitures 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 toobtainher. Today’s numbers on both the personal consumption, expfinishiture, and income, and spfinishing, were right down the middle of the fairway,” Art Hogan, chief markets strategist for B. Riley Wealth in Boston, stated via email.
“This leaves the door wide open for the Fed to cut rates in September and likely again in October and in December.”
Fed funds futures traders are now pricing in 89 per cent odds of a cut 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 up 0.11 per cent at $1.1695. The dollar index, which measures the greenback against a binquireet of currencies, fell 0.09 per cent to 97.79.
The Dow Jones Industrial Average fell 121.89 points, or 0.26 per cent, to 45,516.07, the S&P 500 fell 45.60 points, or 0.70 per cent, to 6,456.26 and the Nasdaq Composite fell 267.70 points, or 1.23 per cent, to 21,437.45.
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, while investors assessed economic data in the U.S. and the euro zone.
MSCI’s gauge of stocks across the globe fell 5.36 points, or 0.56 per cent, to 950.98.The pan-European STOXX 600 index fell 0.64 per cent.
In Treasuries, benchmark 10-year U.S. Treasury yields were higher on the day, while interest-rate-sensitive two-year yields were on track for their largest monthly drop in a year.
The yield on benchmark U.S. 10-year notes rose 1.6 basis points to 4.223 per cent. The 2-year note yield fell 1.6 basis points to 3.619 per cent.
Germany’s 30-year yield , which touched its highest since 2011 earlier in August, has risen 12 basis points this month, putting it on track for its hugegest monthly jump since March, when a historic relocate towards looser fiscal policy sent bond yields surging. Bond yields relocate inversely with prices.
Fed Governor Christopher Waller on Thursday stated 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.
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.
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