Dow leads Wall St revival after inflation data; tech stocks recoup losses
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PCE inflation rises moderately in June
Russell 2000 hits one-week high
Deckers, Baker Hughes climb after results
Dexcom slips after cutting revenue forecast
Indexes up: Dow 1.63%, S&P 1.06%, Nasdaq 0.92%
Updated at 11:46 a.m. ET/1546 GMT
By Ankika Biswas and Lisa Pauline Mattackal
July 26 (Reuters) - Wall Street bounced back on Friday with the blue-chip Dow leading the charge as some megacap tech and chip stocks recovered from the week's pummeling, while a largely in-line key inflation reading kept bets of an early rate cut alive.
Industrial conglomerate 3M MMM.N jumped19%, boosting the Dow to a one-month high after itraised the lower end of its annual adjusted profit forecast.
The Philadelphia SE Semiconductor index .SOX was on track to snap a three-day losing streak as Nvidia NVDA.O, Marvell Technology MRVL.O, Broadcom AVGO.O, Texas Instruments TXN.O and Qualcomm QCOM.O rose more than 1% each.
The Magnificent Seven stocks were mixed, with Microsoft MSFT.O and Meta Platforms META.O gaining more than 1%, while Tesla TSLA.O and Alphabet GOOGL.O shed 0.7% and 2%, respectively.
The 10-year Treasury yield US10YT=RR turned lower after the inflation data. US/
Economically sensitive small-cap stocks rose, with the Russell 2000 .RUT jumping 1%, set for its third straight weekly gain in two months and its best three-week run since August 2022.
The moderate rise in U.S. prices underlined an improving inflation environment, potentially positioning the Federal Reserve to start easing policy in September. The central bank's July monetary policy decision is due next week.
"A cut next Wednesday is unlikely, but the Fed can at least acknowledge that they're more confident in the disinflationary trends," said Brian Jacobsen, chief economist at Annex Wealth Management. "The markets should warmly greet that."
Bets of a 25-basis-point cut by the Fed's September meeting held steady at about 88% after the PCE reading, according to CME's FedWatch. Traders still largely expect two rate cuts by December, according to LSEG data.
At 11:46 a.m. ET, the Dow Jones Industrial Average .DJI was up 652.82 points, or 1.63%, at 40,587.89, the S&P 500 .SPX was up 57.19 points, or 1.06%, at 5,456.41, and the Nasdaq Composite .IXIC was up 158.56 points, or 0.92%, at 17,340.28.
However, the S&P 500 and the Nasdaq remained on track for a second straight week of losses after investors dumpedtech stocks over thepast few weeks. Disappointing earnings from Alphabet and Tesla sparked a steep sell-offin megacap and artificial-intelligence-linked shareson Wednesday.
Worries about WallStreet's growing dependence on a set of high-momentum stocks, whose valuations now appear inflated, have made underperformingsectors like mid- and small-cap stocks seem more attractive, now thatearly rate cuts seem likely.
Industrials .SPLRCI and Materials .SPLRCM led gains across the S&P 500 sector indexes. Energy .SPNY bucked the trend and fell tracking lower oil prices.
In earnings, DeckersOutdoor DECK.N jumped 8.0% after it raisedits annual profit forecast, while oilfield services firm Baker Hughes BKR.O climbed 3.3% after beating estimates for second-quarter profit.
Medical device maker Dexcom DXCM.O slumped 42.0% after cutting its annual revenue forecast.
Of the 206 companies in the S&P 500 that have reported second-quarter earnings till date, 78.6% beat analysts' expectations, according to LSEG data.
Advancing issues outnumbered decliners by a 3.46-to-1 ratio on the NYSE, andby a 2.05-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs, while theNasdaq recorded 161 new highs and 39 new lows.
U.S. stocks weekly performance https://tmsnrt.rs/3yauR7f
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Saumyadeb Chakrabarty and Pooja Desai
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