Wall St listless as eyes on crucial inflation data; Micron, Walgreens slump

FILE PHOTO: People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

By Ankika Biswas and Lisa Pauline Mattackal

(Reuters) -U.S. stock indexes were flat on Thursday, as investors assessed a string of economic data ahead of the Federal Reserve's closely watched inflation report, while Micron and pharmacy chain Walgreens Boots Alliance slumped on disappointing forecasts.

Data showed new orders for key U.S.-manufactured capital goods unexpectedly fell in May, while core durable goods orders fell 0.1% versus forecasts for a 0.2% rise, boosting hopes that a weaker economy could prompt the Federal Reserve to cut interest rates in September.

Weekly jobless claims fell to 233,000, missing expectations of 236,000. Further, a final print showed the U.S. economic growth increased more than estimated in the first quarter.

"We are slowing, but not collapsing. So we continue to move forward. I think one or two rate cuts are probably warranted and I'd like to see that before the end of this year," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

Thursday's data comes one day ahead of the release of the monthly personal consumption expenditures (PCE) price index - the Federal Reserve's preferred inflation gauge.

Megacap stocks firmed as U.S. Treasury yields slipped after the data, with Alphabet, Microsoft and Meta Platforms rising 0.6% to 1%. Amazon.com rose 1.2% after hitting $2 trillion in market value for the first time on Wednesday.

Communication services and real estate led gains among the major S&P 500 sector indexes, while consumer staples was the biggest laggard.

Meanwhile, Micron shed 6.5% after an in-line fourth-quarter revenue forecast disappointed investors hoping for more upside from the memory chipmaker's performance in the artificial intelligence boom.

Nvidia fell 2.3%, continuing its recent turbulent ride.

Walgreens Boots Alliance slumped 24.6% after cutting its 2024 profit forecast and announcing plans to close more underperforming U.S. stores.

Denim maker Levi Strauss slumped 16% after falling short of expectations for second-quarter revenue.

At 11:41 a.m. ET, the Dow Jones Industrial Average was up 59.28 points, or 0.15%, at 39,187.08, the S&P 500 was down 6.15 points, or 0.11%, at 5,471.75, and the Nasdaq Composite was down 17.06 points, or 0.10%, at 17,788.10.

With a handful of expensive heavily weighted stocks supporting Wall Street's ascent since the last leg of 2023, market participants have highlighted concerns over the rally's sustainability and have called out for the need to diversify portfolios to hedge against possible sharp losses.

Meanwhile, investors have largely stuck to their view of around two rate cuts this year, as per LSEG's FedWatch data, even though the Fed has projected only one, and a 60% chance of a cut in September.

In a policy essay, Atlanta Fed President Raphael Bostic said inflation "appears to be narrowing" and that should allow rates cuts later this year.

Further, President Joe Biden and former President Donald Trump are set to face each other in the first debate during the day.

Advancing issues outnumbered decliners by a 1.34-to-1 ratio on the NYSE and by a 1.23-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and two new lows, while the Nasdaq recorded 28 new highs and 86 new lows.

(Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel)