Wall Street was mixed on Thursday as a selloff in Salesforce weighed on the Dow, while traders digested U.S. data that suggested the Federal Reserve’s interest rate hikes are working.
On Wednesday, the S&P 500 surged over 3% on optimism the Fed might moderate its campaign of interest rate hikes.
U.S. manufacturing activity shrank for the first time in 2-1/2 years in November as higher borrowing costs weighed on demand for goods, data showed, evidence the Fed’s rate hikes have cooled the economy.
As well, the personal consumption expenditures (PCE) price index rose 0.3%, the same as in September, and over the 12 months through October the index increased 6.0% after advancing 6.3% the prior month.
Excluding the volatile food and energy components, the PCE price index rose 0.2%, one-tenth less than expected, after gaining 0.5% in September.
“On a normal day, the package of data this morning would be pretty risk-on, but after the rally yesterday, I think it’s not quite good enough to push another leg higher,” said Ross Mayfield, an investment strategy analyst at Baird.
Wednesday’s rally drove the S&P 500 index (.SPX) above its 200-day moving average for the first time since April after Fed Chair Jerome Powell said it was time to slow the pace of interest rate hikes.
Traders now see a 79% chance the Fed will increase its key benchmark rate by 50 basis points in December and a 21% chance it will hike rates by 75 basis points.
Dollar General Corp (DG.N) fell 8.1% after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp (COST.O) shed 6.3% after the membership-only retail chain reported slower sales growth in November.
In afternoon trading, the S&P 500 was down 0.09% at 4,076.38 points.
The Nasdaq gained 0.14% to 11,483.66 points, while the Dow Jones Industrial Average was down 0.59% at 34,384.99 points.
A report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended Nov. 26.
Investors now await nonfarm payrolls data on Friday for clues about how rate hikes have affected the labor market.
Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 1.1-to-one ratio.
The S&P 500 posted 30 new highs and no new lows; the Nasdaq recorded 90 new highs and 59 new lows.