S&P 500 ends up slightly as tech dips, inflation cools
Sign up now: Get ST's newsletters delivered to your inbox
Traders working on the floor of the New York Stock Exchange, in New York City, on Feb 13.
PHOTO: REUTERS
- The S&P 500 closed slightly higher as lower than expected US inflation in January boosted hopes for a Federal Reserve rate cut, despite AI disruption fears.
- Cooling inflation data raised trader bets for a June Fed rate cut to 52.3% from 48.9% (CME Group). Experts note inflation is moderating, not accelerating.
- Defensive sectors and Applied Materials gained, but AI worries dragged megacap tech. Future trading may be 'choppy' due to elections and Fed transition.
AI generated
NEW YORK - The S&P 500 closed barely higher on Feb 13, with technology and communications services down on nagging fears of AI-disruption but equities drew support from optimism that cooling inflation data would support Federal Reserve rate cuts.
Data showed US consumer prices increased less than expected in January, prompting traders to slightly raise the chance of a 25 basis point interest-rate cut in June to 52.3 per cent from 48.9 per cent, according to the CME Group’s FedWatch tool.
“The bottom line is, this is a good number. It suggests that we’re still away from the Fed target of 2 per cent, but inflation is not accelerating and perhaps maybe we’re beginning to see some daylight in terms of the tariff inflationary aspect of it. It’s still evident, but it’s moderating,” said Mr Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
According to preliminary data, the S&P 500 gained 2.32 points, or 0.03 per cent, to end at 6,835.08 points, while the Nasdaq Composite lost 52.04 points, or 0.23 per cent, to 22,545.11.
The Dow Jones Industrial Average rose 47.44 points, or 0.10 per cent, to 49,499.42.
Equity markets have pulled back from record levels recently as fears of disruption from artificial intelligence fuelled a selloff in sectors spanning software and insurance to trucking companies. However the S&P 500 software and services index was up more than 1 per cent on Feb 13 while the S&P 500 tech sector was edging up 0.06 per cent.
The Feb 13 inflation data encouraged investor hopes for Fed rate cuts after stronger-than-expected January jobs data on Feb 11 sowed doubts.
Against the backdrop of AI worries, looming US mid-term elections in November and Fed chair Jerome Powell expected to be replaced by Kevin Warsh in May, Mr Phil Orlando, chief market strategist at Federated Hermes predicted more choppy trading ahead.
“In the data this morning inflation was better than expected and we think the trajectory continues to work lower,” said Mr Orlando. He added that historically when a Fed leadership transition happens in a mid-term year, the market has hit a “double-digit air-pocket every time that’s occurred”.
Megacap tech stocks were weak with Nvidia and Apple providing big drags while Applied Materials provided a strong boost.
Defensive utilities and real estate sectors were top gainers among S&P 500‘s 11 major industry indexes.
Healthcare was also a boost with Dexcom and Moderna shares both rallying after their fourth-quarter earnings report.
Applied Materials shares rallied after the chipmaking-equipment firm forecast second-quarter revenue and profit above Wall Street expectations.
Networking equipment provider Arista Networks also gained during the session after forecasting annual revenue above expectations.
White House trade adviser Peter Navarro said there was no basis to reports that the administration was planning to reduce steel and aluminum tariffs.
Still some steelmakers came under pressure including Nucor and Steel Dynamics. Also Aluminium producer Alcoa fell and Century Aluminium shares tumbled. REUTERS
