NEW YORK (AP) — A sell-off in technology stocks dragged Wall Street lower again Friday, overshadowing gains in other, less-powerful stocks in the market.
The S&P 500 was down 0.5% in midday trading, on track for its first losing week in the past six weeks, despite gains among most of the stocks in the index. A drop in tech stocks helped push the Nasdaq Composite Index down 1.2% for the market as of 11:30 a.m. Eastern time, while the Dow Jones Industrial Average was up 65 points, or 0.2%, on the way.
Dell fell 22.1% even though its latest quarterly profit was in line with analysts' expectations. The company's shares had already risen 122% into 2024 prior to the earnings release, meaning expectations were sky-high and analysts noted concerns about how much profit Dell was squeezing out of every dollar of revenue.
Nvidia finally lost steam after surging more than 20% since reporting jaw-dropping earnings last week, falling 1.5% and on track to drop for a second straight day. The semiconductor company was one of the S&P 500's biggest weightings on Friday, trailing only Microsoft's 1.9% drop and Amazon's 2.6% drop.
Non-tech stocks were broadly stable after the latest inflation reading came in roughly in line with expectations, leaving the question of when the low interest rates Wall Street craves will arrive.
For stocks, a drop in Treasury yields in the bond market provided some relief to stocks, erasing gains earlier in the week that had weighed on stocks. Yields fell following the release of a report showing a key measure of inflation stayed at 2.7% last month, as expected. Some underlying trends showed a slightly better-than-expected improvement.
That could give the Fed more confidence that inflation is falling sustainably toward its target, which it says is necessary before cutting its key interest rate.
The Federal Reserve has kept the federal funds rate at its highest level in more than two decades in the hopes of slowing the economy and tamping down high inflation, but keeping rates high for too long could stifle economic growth and lead to a recession in which workers lose their jobs and corporate profits plummet.
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“The conundrum for the Fed is whether growth will slow faster than inflation,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We've gone from rapid growth to rapid slowing very quickly. The road to lower inflation has been a fun one so far, but the last mile will be much harder.”
A U.S. government report on Friday also showed that consumer spending growth weakened more than economists expected last month, as did Americans' income growth.
Jeffrey Roach, chief economist at LPL Financial, said the numbers suggest businesses “need to prepare for an environment where consumers won't be as splurge-y as they were last year.”
Following the report, the yield on the 10-year Treasury note fell to 4.49% from Thursday's close of 4.55%. It had risen above 4.60% earlier this week on concerns about weak demand following the bond auction.
The yield on the two-year Treasury note, which more accurately reflects expectations of Fed action, fell to 4.88% from Thursday's close of 4.93%.
Few expect the Fed to cut interest rates at its next meeting in less than two weeks, but traders see an 83% chance of at least one rate cut by the end of the year, according to data from CME Group.
Shares in industries that tend to benefit most from easing interest rates led the market on Friday. Real estate stocks in the S&P 500 rose 1.2% overall, the biggest gain among the 11 sectors that make up the index. Boston Properties rose 2.7%.
Gap Inc. posted its latest quarterly profit and sales that beat analysts' expectations, growing at 25%, the biggest rate in the market. The parent company of Old Navy and Banana Republic reported growth across all of its brands, reversing earlier declines for most of them. The company also raised its sales and profitability forecasts for this year, even as it noted that the economic outlook remains uncertain.
MongoDB shares fell by a quarter despite better-than-expected profit and revenue. The developer database company gave current-quarter and full-year profit guidance that fell short of analysts' expectations.
Trump Media & Technology Group Inc. reversed an initial gain to fall 4.9% in the first trading session after Donald Trump was found guilty of 34 felony counts on Thursday. The company, which runs the Truth social platform, had previously warned in a filing with U.S. securities regulators that a conviction for Trump could hurt the company.
Overseas stock markets, Asian and European stock indexes were mixed: Tokyo's Nikkei rose 1.1%, while Hong Kong's Hang Seng Index fell 0.8%.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Cho, The Associated Press
