Wall Street indexes mixed as Alphabet slips, data keeps rate-cut bets intact

By Shashwat Chauhan and David French

(Reuters) -Wall Street's main indexes offered a mixed bag on Wednesday, as Alphabet (NASDAQ:GOOGL ) and some megacap tech stocks traded lower but the latest inflation data reassured investors betting the Federal Reserve would start cutting U.S. interest rates next month.

Moves were generally subdued though, with many investors away on a mid-August afternoon, and new triggers for trading were absent, contributing to an overall listless picture among the benchmarks.

The Google-parent dropped 3.2% after a media report said the U.S. Department of Justice is considering options that include breaking up the online search engine.

Losses in Alphabet weighed on the Nasdaq and pulled the communication services sector down 1.3%, the most among the 11 major S&P 500 sectors.

Other megacaps were mixed: Tesla (NASDAQ:TSLA ) slumped 3.5% and Meta Platforms (NASDAQ:META ) was 0.4% lower. Microsoft (NASDAQ:MSFT ) was up 0.6% and Nvidia (NASDAQ:NVDA ) rose 0.7%.

At 2:00 p.m. EDT, the S&P 500 gained 11.88 points, or 0.22%, to 5,446.31 points, while the Nasdaq Composite lost 40.67 points, or 0.24%, to 17,146.73. The Dow Jones Industrial Average rose 257.24 points, or 0.64%, to 40,022.88.

The S&P 500 and the Nasdaq had posted four straight session of gains following softer-than-expected producer prices data that indicated inflation continued to moderate, although not yet all the way to the U.S. central bank's 2% target.

A rebound in megacap and tech stocks has helped markets recoup most losses from a global market rout early this month after data showed the U.S. unemployment rate surged in July.

Data on Wednesday showed U.S. consumer prices rose moderately in July, and the annual increase in inflation slowed to below 3% for the first time since early 2021, supporting the view inflation was being tamed.

"There is nothing in here that should prevent the Fed from proceeding with a rate cut in September," said David Doyle, head of economics at Macquarie.

"The pace of magnitude of easing will depend broadly on incoming data with inflation and employment figures taking on particular importance."

Money markets now see a 55% chance of a 25-basis point (bps) rate cut at the Fed's Sept. 17-18 meeting, as per the CME FedWatch Tool. Before the data, traders were nearly evenly split between a 25-bps and 50-bps cut.

The Cboe volatility index, Wall Street's fear gauge, stayed below its long term average of 20 points for the second day at 16.6 after hitting its highest since 2020 just last week.

A majority of the major S&P sectors were in positive territory, led by a 1.2% rise in financials. Its advance was aided by gains of more than 4.6% by Progressive and Charles Schwab (NYSE:SCHW ) , which rose after positive July performance numbers, and Allstate (NYSE:ALL ) , which climbed after agreeing to sell a business unit.

Both of the insurers were on course to post record closing highs.

Kellanova surged 7.7% after family-owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal.



Cardinal Health (NYSE:CAH ) gained 4.3% after the drug distributor raised its 2025 profit forecast.

TurboTax parent Intuit (NASDAQ:INTU ) slipped 1.6% after Morgan Stanley downgraded its rating to "equal-weight" from "overweight".

Source: Investing.com