Wall Street ends lower as investors digest inflation data, presidential debate
Traders add to Fed rate cut bets as inflation eases
Nike slumps after results
Infinera jumps after Nokia to buy company
Updates to 4 p.m. ET
By Ankika Biswas, Lisa Pauline Mattackal and Carolina Mandl
June 28 (Reuters) - U.S. stocks ended weaker on Friday after an early rally fizzled as investors digested in-line inflation data and weighed political uncertainty after the U.S. presidential debate, while Nike had steepest one-day fall in over two decades after a gloomy forecast.
"I don't think the inflation number changes much because the Federal Reserve has been pretty serious about their 2% target and remains disciplined," said Ann Miletti, Allspring's head of active equity.
Data showed U.S. monthly inflation was unchanged in May, an encouraging development after strong price increases earlier this year raised doubts over theeffectiveness of the Fed's monetary policy.
The Commerce Department report also showed consumer spending rose marginally last month, fueling optimism that the U.S. central bank could engineer a much-desired "soft landing" for the economy.
Bets on a rate cut in September rose to 66% after the personal consumption expenditures price index release, LSEG FedWatch data showed.
Traders have maintained bets on two cuts despite Fed projections of just one this year, as they hope inflation will keep cooling.
The first debate on Thursday between U.S. President Joe Biden and Republican rival Donald Trump also weighed on stocks, said Thomas Martin, senior portfolio manager at Globalt Investments, citing the incumbent's shaky performance.
"People are trying to think about what's going to happen with the presidential election. So instead of uncertainty decreasing after the debate, it's increased," he said.
Treasury yields reversed early losses to end higher , adding pressure on some megacap stocks.
San Francisco Fed President Mary Daly acknowledged the cooling inflation, and noted that it is "good news that policy is working." Fed Governor Michelle Bowman said the central bank would follow its own path as its inflation goal has yet to be reached.
The S&P 500 energy index .SPNY posted gains, while utilities .SPLRCU fell.
Nike NKE.N slumped after forecasting a surprise drop in fiscal 2025 revenue, weighing on the broader consumer discretionary sector .SPLRCD.
According to preliminary data, the S&P 500 .SPX lost 23.71 points, or 0.43%, to end at 5,460.70 points, while the Nasdaq Composite .IXIC lost 130.01 points, or 0.73%, to 17,728.68. The Dow Jones Industrial Average .DJI fell 54.11 points, or 0.14%, to 39,109.95.
The FTSE Russell finalized the reconstitution of its indexes at the end of the session.
The S&P 500 and the Nasdaq indexes were set for quarterly gains, but the Dow .DJI was on track to drop, highlighting the divergence between the more tech-heavy indexes and the rest of the market.
Among individual stocks, optical networking gear maker Infinera INFN.O jumped after Nokia NOKIA.HE said it wouldacquire the company in a $2.3 billion deal.
Nasdaq leads Wall Street's 2024 rally https://tmsnrt.rs/3XChlUe
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel and Richard Chang
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