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Wall Street mixed after holiday as markets await inflation data

Wall Street mixed after holiday as markets await inflation data
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By Johann M Cherian and Lisa Pauline Mattackal

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(Reuters) – Wall Street’s main indexes were mixed on Tuesday as traders returned from a holiday-extended weekend, with the focus on key inflation data later in the week that could influence expectations for the Federal Reserve’s rate-cut path.

The possibility that the world’s most influential central bank could kick off interest-rate cuts this year has sent Wall Street on a record-breaking rally since late 2023, with the Nasdaq and S&P 500 marking their fifth straight week of gains on Friday.

However, expectations for the timing of rate cuts have see-sawed, with policymakers wary as the data still reflects sticky inflation.

Market attention now shifts to the U.S. core Personal Consumption Expenditures Price Index report for April later in the week. The Fed’s preferred inflation barometer is expected to hold steady on a monthly basis.

Traders see a 51.2% chance the first rate cut could happen in September, according to the CME FedWatch Tool.

“The Fed is still in play… real interest rates need to come down,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Overall, inflation is trending down and slowing inflation will give the Fed cover to lower rates,” Forrest said.

The Nasdaq touched a fresh intraday record high, led by a 4.5% rise in AI darling Nvidia and its fellow chip stocks. The Philadelphia Semiconductor Index gained 1%.

The Dow lagged other indexes, dragged by the healthcare and financial sectors. Healthcare also led the S&P 500 subsector losses.

U.S. trading moves to a shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency, but is expected to temporarily increase transaction failures for investors.

Indexes were little changed after the U.S. Consumer Confidence report for May was stronger than expected.

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Minneapolis Fed President Neel Kashkari said in an interview with CNBC that the U.S. central bank should wait before cutting interest rates, adding that it could potentially even hike rates if inflation does not fall further.

At 10:14 a.m. ET, the Dow Jones Industrial Average was down 135.40 points, or 0.35%, at 38,934.19, the S&P 500 was down 0.77 points, or 0.01%, at 5,303.95, and the Nasdaq Composite was up 54.70 points, or 0.32%, at 16,975.49.

UBS Global Research raised its year-end target for the benchmark index to 5,600 from an earlier projection of 5,400, marking the highest forecast among major brokerages.

Apple rose 0.9% after iPhone sales in China surged 52% in April from a year earlier, Reuters calculations based on industry data showed.

Shares of T-Mobile and United States Cellular’s rose 1% and 1.4%, respectively, after T-Mobile said it would buy almost all the regional carrier’s wireless operations in a $4.4 billion deal.

Meme stock GameStop shot up 16.2% after the videogame retailer said late on Friday it had raised $933 million by selling 45 million shares, as part of an “at-the-market” offering.

Advancing issues outnumbered decliners by a 1.22-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and seven new lows, while the Nasdaq recorded 66 new highs and 44 new lows.

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(Reporting by Johann M Cherian, Lisa Pauline Mattackal and Shubham Batra in Bengaluru; Editing by Pooja Desai)



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