Nasdaq down, S&P off high with tech stocks under pressure, PCE inflation staying sticky

Key U.S. stock indexes were mixed Wednesday, as investors waded through a slew of economic data and some disappointing corporate financial updates ahead of the Thanksgiving Day holiday.

Alongside signals of softness from tech stalwarts, the Federal Reserve’s preferred inflation gauge showed stalled movement downward toward the central bank’s 2% inflation target. Wednesday’s data flurry arrived after Tuesday’s record closing highs for the S&P 500 (SP500) and the Dow (DJI), extending their robust year-to-date gains.

On Wednesday, the S&P 500 (SP500) -0.4%, and the Dow (DJI) clung around the flat line. The Nasdaq Composite (COMP:IND) slumped -0.9%. Tech was the weakest sector on among the S&P 500’s (SP500) 11 groups, losing -1.5%, with PC makers Dell (Dell) and HP (HPQ) the index’s sharpest decliners.

The U.S. Bureau of Economic Analysis said the core PCE price index increased 0.3% M/M in October, which matched expectations as well as September’s reading.

“The last mile towards price stability has been stymied by still ‘sticky’ inflation and bumps along road,” Quincy Krosby, chief global strategist at LPL Financial, said. The PCE report also showed personal income and disposable income each accelerated in October from September.

“With the economic landscape underpinned by a resilient labor market, and solid consumer spending, the Fed remains concerned about lower wage earners still struggling with higher interest rates, and small businesses coping with higher prices and bank loans,” Krosby said.

Traders in the fed funds futures market bumped up expectations of the Fed cutting interest rates by 25 basis points in December, to 70% from 59.4% a day earlier, according to the CME FedWatch tool.

Treasury yields fell after the in-line inflation report. The 10-year Treasury yield (US10Y) fell 4 basis points to 4.26%. The 2-year yield (US2Y) fell 3 basis points to 4.23%. Trading in both the bond and equity markets will be closed on Thursday, and Friday will mark early closing hours.

Meanwhile on Wednesday, U.S. GDP growth was unrevised at 2.8% in Q3, consumer spending was revised down, while durable goods order rose less than expected in October.

Initial jobless claims fell more than expected and the U.S. October pending home sales index unexpectedly jumped 2% M/M to 77.4.

Among tech stocks, HP (HPQ) -12.7% after the PC giant issued a forecast for the coming quarter that was much worse than expected.

Dell (DELL) -13% after posting third-quarter results that were in-line with expectations, though it experienced weakness in the PC market.

Workday (WDAY) -7.4% as the HR software maker lowered its full-year revenue outlook.

Major U.S. stock averages finished higher Tuesday, with investors setting aside President-elect Donald Trump’s new tariff threats, while the Federal Reserve signaled a moderate pace in cutting interest rates.

“Despite the tariff threats, U.S. equities held up fairly well yesterday, with the S&P 500 advancing for a 7th consecutive session as U.S. exceptionalism continued. That said, those companies more exposed to trade saw a clear underperformance,” Deutsche Bank’s Jim Reid said.