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Lyft falls as pricing strategy casts shadow over profit goals
Penn Entertainment surges on sports betting business deal
Indexes mixed: Dow up 0.12%, S&P off 0.05%, Nasdaq falls 0.39%
(Updated at 10:02 a.m. ET/1402 GMT)
By Bansari Mayur Kamdar and Johann M Cherian
Aug 9 (Reuters) – The tech-heavy Nasdaq and the S&P 500 fell on Wednesday ahead of a key inflation report this week after mostly dovish comments from U.S. Federal Reserve officials.
Rate-sensitive megacap growth and technology stocks, that have led the Wall Street rally this year, such as Nvidia , Apple and Tesla shed between 0.6% and 2.5% in early trading.
“There’s been a little bit of shine coming off the Nasdaq that coincides with some profit taking that occurred at the end of July,” Robert Pavlik, senior portfolio manager at Dakota Wealth, said.
The Consumer Price Index (CPI) for July, due on Thursday, is expected to show a slight year-over-year acceleration. On a month-to-month basis, consumer prices are seen increasing 0.2%, the same rate as in June.
Philadelphia Fed President Patrick Harker said on Tuesday the U.S. central bank may be at the stage where it can leave interest rates unchanged, barring any abrupt change in the direction of recent economic data.
However, some central bank officials are still leaning the other way, with Fed Governor Michelle Bowman on Monday saying the combination of still-elevated inflation and continued economic growth meant further rate increases are likely.
Traders expect an 86.5% chance of no rate hike at the Fed’s next policy meeting in September, according to CME FedWatch Tool.
“The good news is we’re starting to see more folks on the Federal Reserve saying that perhaps they may well be done (with rate hikes),” Art Hogan, chief market strategist at B Riley Wealth, said.
Wall Street’s main indexes ended the previous session lower in a broad selloff after the downgrading of several small and mid-sized banks by credit rating agency Moody’s.
Big banks extended losses on Wednesday, with Bank of America and Wells Fargo down 0.3% and 0.8%, respectively.
Adding to concerns about the global economy, China’s consumer sector fell into deflation and factory-gate prices extended declines in July, as the world’s second-largest economy struggled to revive demand.
At 10:02 a.m. ET, the Dow Jones Industrial Average was up 42.88 points, or 0.12%, at 35,357.37, the S&P 500 was down 2.24 points, or 0.05%, at 4,497.14, and the Nasdaq Composite was down 53.88 points, or 0.39%, at 13,830.45.
Six of the top 11 S&P 500 sectors advanced, led by gains in energy stocks, that rose 1.8%, touching a near six-month high tracking a jump in crude oil prices.
Casino owner Penn Entertainment’s shares jumped 15.9% on a $2 billion deal with Walt Disney’s ESPN to launch a sports betting business.
Walt Disney’s shares rose 0.9% ahead of its quarterly results due after markets close.
Lyft signaled it would double down on competitive pricing to catch up with rival Uber, taking the shine off its strong earnings forecast and sending the company’s shares down 6.2%.
Of the 443 S&P 500 companies that have reported results as of Tuesday, 78.6% beat analyst expectations, according to Refinitiv data.
Advancing issues outnumbered decliners for a 1.29-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and four new lows, while the Nasdaq recorded 42 new highs and 79 new lows.
(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta)