Dow closes at record high on tame inflation report that also boosts small caps
U.S. PCE stands at 2.2% in Aug
Russell 2000 index up 1.5%
Bristol-Myers gains after schizophrenia drug approval
Costco slips after Q4 revenue misses estimates
Indexes: Dow up, S&P 500 down, Nasdaq down
Updates to 4:00 PM ET
By Echo Wang
Sept 27 (Reuters) -The blue-chip Dow Jones Industrial Average closed ata record high on Friday as investors welcomed a subdued inflation report that also lifted small-cap stocks which stand to benefit from moreinterest rates cuts by the Federal Reserve.
The technology-heavy Nasdaq slipped and the S&P 500 edged slightly lower but both indexes stayed close to recent record highs. All three Wall Street indexes logged their third consecutive week of gains.
“The market at this point..(is) pretty much pricing in a soft landing, and pricing in that we have defeated inflation, and that the Fed will be able to lower rates without causing a bunch of harm to the economy”, said Liz Young Thomas, head of investment strategy at SoFi in New York.
The Commerce Department reported a moderate rise in consumer spending while inflation pressures continued to ease. Separately, the University of Michigan's final September reading on consumer sentiment came in at 70.1, surpassing economists' expectations of 69.3, according to a Reuters poll.
According to preliminary data, the S&P 500 .SPX lost 7.64 points, or 0.13%, to end at 5,737.68 points, while the Nasdaq Composite .IXIC lost 73.41 points, or 0.40%, to 18,116.88. The Dow Jones Industrial Average .DJI rose 130.51 points, or 0.31%, to 42,305.62.
The Russell 2000 index .RUT, which tracks small caps that fare better in a low-rateenvironment, climbed to a one-week high.
Shares of NvidiaNVDA.O slipped, weighing on the technology-heavy Nasdaq.
Investors now slightly favor a 50-basis-point cut at the Fed's next meeting with a 52.1% chance, up from a coin toss before the data, as per the CME Group's FedWatch Tool.
Cooling price pressures prompted the Fed to cut rates by 50 bps last week. Focus will now shift to a slew of labor market reports due next week.
Among individual stocks, Bristol-Myers Squibb BMY.N surged after the U.S. FDA approved its schizophrenia drug.
Costco Wholesale COST.O dropped after posting downbeat fourth-quarter revenue.
U.S.-listed shares of Chinese firms, including AlibabaBABA.N, PDD Holdings PDD.O and NetEase NTES.O gained after China's central bank lowered interest rates and injected liquidity into the banking system.
The optimism extended to miners, with Arcadium ALTM.N gaining, and U.S.-listed shares of BHP BHP.N also advancing.
PCE, the shorter term view https://reut.rs/3WXgbkd
Reporting Echo Wang in New York; Additional Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Anil D'Silva, Maju Samuel and David Gregorio
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