Wall Street struggles for direction as Alphabet falls, data keeps rate-cut bets intact
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Kellanova jumps after Mars to buy co in $36 bln deal
U.S. CPI rises as expected in July
Alphabet dips after report US mulls Google break-up
Indexes: Dow up 0.23%, S&P 500 up 0.11%, Nasdaq down 0.19%
Updated at 11:18 a.m. ET/1518 GMT
By Medha Singh and Shashwat Chauhan
Aug 14 (Reuters) - Wall Street's main indexes were mixed onWednesday, as Alphabet slid and as signs of moderating inflation kept bets alive that the U.S. Federal Reserve would begin its policy easing cycle next month, albeit with a smaller rate cut.
The Google-parent GOOGL.O dropped3.6%after a media report said the U.S. Department of Justice is considering options that include breaking up the online search engine.
Losses in Alphabet weighed on the Nasdaq and pulled the communication services .SPLRCL sector down 1.3%, the most among the 11 major S&P 500 sectors.
A rebound in megacap and technology stocks have helped markets recoup most of their losses from a global market rout earlier this month that was partly caused by data showing a surge in U.S. unemployment rate in July.
Latest data showed U.S. consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time since early 2021.
"There is nothing in here that should prevent the Fed from proceeding with a rate cut in September," said David Doyle, head of economics at Macquarie.
"The pace of magnitude of easing will depend broadly on incoming data with inflation and employment figures taking on particular importance."
Money markets now see a 55% chance of a 25-basis point (bps) rate cut at the Fed's Sept. 17-18 meeting, as per the CME FedWatch Tool. Before the data, traders were nearly evenly split between a 25-bps and 50-bps cut.
Both the S&P 500 .SPX and the Nasdaq .IXIC clocked their fourth straight session of gains on Tuesday following softer-than-expected producer prices data that indicated inflation continued to moderate, although it is yet to reach the U.S. central bank's 2% target.
At 11:18 a.m. ET, theDow Jones Industrial Average .DJI rose 92.75 points, or 0.23%, to 39,858.60, the S&P 500 .SPX gained 6.16 points, or 0.11%, to 5,440.63 and the Nasdaq Composite .IXIC lost 29.61 points, or 0.19%, to 17,155.69.
The Cboe volatility index .VIX, Wall Street's fear gauge, stayed below its long term average of 20 points for the second day at 16.49 afterhitting its highest since 2020 just last week.
AI stocks Nvidia NVDA.O, Super Micro SMCI.O and Dell DELL.N reversed early gains after staging a strong recovery this week, while most megacapand growth stocks were mixed.
Kellanova K.N surged over 7.7%after family-owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal.
Cardinal Health CAH.N gained 5.2% after the drug distributor raised its 2025 profit forecast.
TurboTax parent Intuit INTU.O slipped 1.9% after Morgan Stanley downgraded its rating to "equal-weight" from "overweight".
Advancing issues outnumbered decliners by a 1.25-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.46-to-1 ratio on the Nasdaq.
The S&P 500 posted 24 new 52-week highs and two new lows, while the Nasdaq Composite recorded 45 new highs and 92 new lows.
Reporting by Medha Singh and Shashwat Chauhan in Bengaluru; Editing by Maju Samuel
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