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* All three indexes are expected to record quarterly declines.
* PCE data shows underlying price pressures easing
* Nike shares soar after publishing higher profit than first quarter
* Indices: Dow down 0.51%, S&P down 0.33%, Nasdaq up 0.08%.
Sept 29 (Reuters) – The S&P 500 fell on Friday as investors digested the implications of a U.S. inflation report for the Federal Reserve’s interest rate policy and adjusted their portfolios on the final day of a third poor quarter for stocks.
The benchmark S&P 500 index was also on track to post its biggest monthly percentage decline of the year.
Data showed that the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 3.9% on an annual basis in August, the first time in more than two years since it fell below 4%. The Fed tracks PCE price indexes to achieve its 2% inflation target.
The data showed better-than-expected but still elevated inflation, said Eric Freedman, chief investment officer at US Bank Asset Management.
In the meantime, Mr. Freedman added, “we are at the end of the quarter, and the end of the quarter brings with it all kinds of activity in the stock and bond markets.”
The Dow Jones Industrial Average lost 172.50 points, or 0.51%, to 33,493.84, the S&P 500 lost 14.22 points, or 0.33%, to 4,285.48 and the Nasdaq Composite gained 11.56 points, or 0.08%, to 13,212.83.
Among S&P 500 sectors, energy fell the most, losing 1.9%, while financials fell 0.7%. Energy remained by far the sector which grew the most in the third quarter.
“Energy and financial stocks have been up on a relative basis and are feeling some rebalancing today,” Freedman said.
The three main indexes are expected to experience their first quarterly decline in 2023.
The highly anticipated PCE index data follows the Fed’s upbeat outlook for long-term interest rates, which rattled stocks as Treasury yields rose to their highest level in 16 years .
Investors have also been following developments in Washington. Hardline Republicans in the U.S. House of Representatives have rejected a bill proposed by their leader to temporarily fund the government, making a partial shutdown of federal agencies starting Sunday almost certain.
Traders also worried that a $16 billion JP Morgan fund, which is expected to reset its options positions on Friday, would be another source of market volatility.
On the corporate side, shares of Nike jumped 7% after the world’s largest sportswear maker beat Wall Street estimates for first-quarter profit.
Rising stocks outnumbered falling stocks by a ratio of 1.1 to 1 on the NYSE. There were 44 new highs and 91 new lows on the NYSE.
On the Nasdaq, rising stocks outnumbered falling stocks by a ratio of 1.1 to 1. The Nasdaq recorded 39 new highs and 135 new lows. (Reporting by Lewis Krauskopf in New York, Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Arun Koyyur, Maju Samuel and David Gregorio)