Dow jumps amid broader market rally in countdown to inflation data
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Fed's preferred inflation PCE data due on Friday
Nvidia on track for third straight declining session
Meta gains after report of AI partnership talks with Apple
Indexes: Dow up 0.88%, S&P up 0.29%, Nasdaq down 0.26%
Updated at 11:53 a.m. ET/1553 GMT
By Ankika Biswas and Lisa Pauline Mattackal
June 24 (Reuters) - The blue-chip Dow hit a one-month high in a broad-based rally on Monday, as investors rotated out of AI-linked stocks, while focus turned to a key inflation print later in the week to sharpen bets around interest rate cuts this year.
Nvidia NVDA.O dropped4.9%, sliding for the third day, with market participants citing profit taking in the semiconductor bellwether and other AI stocks following its meteoric rise to theworld's most valuable company last week.
Other chip stocks including U.S. shares of Taiwan Semiconductor Manufacturing TSM.N, Broadcom AVGO.O, Marvell Technology MRVL.O and Qualcomm QCOM.O dropped 2%-5%, dragging the chip stocks index .SOX down 1.7%.
"The AI craze's starting to cool off a bit and surprisingly with the potential for rates to go lower, you would think it would be an additional boost and we're not seeing that. From evaluation standpoint, they got extremely expensive," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
"If inflation comes in softer, the market could broaden out quite significantly... The breadth will get wider and everything beyond the AI stocks."
Technology .SPLRCT was the only laggard among the 11 S&P 500 sector indexes, hitting a near two-week low.
The blue-chip Dow .DJI jumped over 1% intraday and was on course for a five-day winning streak. The small-caps index Russell 2000 .RUT also hit an over one-week high, in a sign of broader market gains.
The biggest event on investors' radar for the week is Friday's personal consumption expenditures (PCE) price index report- the Federal Reserve's preferred measure of inflation, expected to show a moderation in price pressures.
Market participants are still expecting about two rate cuts this year, pricing in a 61% chance of a 25-basis-point cutin September, asper LSEG's FedWatch.
The data comes againstthe backdrop of investors weighing the moderation in recent inflation data against the Fed's latest projection of one rate cut likely in December.
Investors also awaited remarks from Fed voting committee member and San Francisco President Mary Daly during the day, in light of the narrative of higher-for-longer interest rates maintained by several Fed policymakers.
Other events lined up for the week include durable goods, weekly jobless claims and final first-quarter GDP figures, the annual Russell index reconstitution, and some quarterlyearnings.
Further, PresidentJoe Biden will debate rival Donald Trump in Atlanta on Thursday, with both neck-and-neck in national opinion polls.
At 11:53 a.m. ET, the Dow Jones Industrial Average .DJI was up 345.49 points, or 0.88%, at 39,495.82, the S&P 500 .SPX was up 15.86 points, or 0.29%, at 5,480.48, and the Nasdaq Composite .IXIC was down 45.18 points, or 0.26%, at 17,644.18.
Meta Platforms META.O rose 2% aftera report that the Facebook parent has discussed integrating its generative AI model into Apple's AAPL.O recently announced AI system for iPhones. Apple's shares also climbed 2.2%.
RXO RXO.N leapt 23.3% on plans to buy United Parcel Service's UPS.N Coyote Logistics business unit for $1.025 billion.
Advancing issues outnumbered decliners by a 2.91-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq.
The S&P index recorded 31 new 52-week highs and one new low, while the Nasdaq recorded 34 new highs and 78 new lows.
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel
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