Stocks initially rallied on Friday but have since surrendered much of those gains as trading progressed. The major indices have retreated significantly from their earlier highs.
Both the Nasdaq and the S&P 500 briefly turned negative along with the Dow, although they have managed to recover somewhat.
As of now, the indices are showing mixed results. The Dow has dipped by 71.79 points, or 0.2%, to 41,263.26, while the Nasdaq has risen by 62.35 points, or 0.4%, to 17,578.78, and the S&P 500 is up by 10.81 points, or 0.2%, to 5,602.77.
The initial uptrend was driven by a favorable response to U.S. consumer price inflation data, which is closely monitored by the Federal Reserve.
According to a report from the Commerce Department, consumer prices in July increased in line with economists' expectations, while the annual rate remained unchanged.
The personal consumption expenditures (PCE) price index saw a modest rise of 0.2% in July, matching the increase observed in June and economist predictions. Excluding food and energy prices, the core PCE price index also grew by 0.2%.
On an annual basis, both the PCE price index and the core PCE price index remained steady at 2.5% and 2.6%, respectively, contrary to economists' projections of a slight increase.
This data has bolstered expectations for a Federal Reserve interest rate cut next month. However, some analysts, like Harris Financial Group's Jamie Cox, argue that a 50 basis point cut is unwarranted.
The consensus appears to have priced in a 25 basis point rate cut for September, and many traders took this as a cue to lock in some gains. CME Group's FedWatch Tool indicates a 69.5% chance of a quarter-point cut and a 30.5% chance of a half-point cut.
However, ING Chief International Economist James Knightley suggests a weak jobs report next week could sway the odds towards a 50bp cut.
### Sector News
Oil service stocks have faced substantial selling pressure, leading to a 1.5% drop in the Philadelphia Oil Service Index. This weakness correlates with a sharp decline in crude oil prices; October crude futures plunged $2.17 to $73.74 a barrel.
Gold stocks have also weakened amid a significant decline in gold prices, with networking and biotechnology stocks following suit.
Conversely, semiconductor stocks have maintained a strong performance, boosting the Philadelphia Semiconductor Index by 1.6%. Intel (INTC) climbed 7.7% following a Bloomberg report that suggested the company may consider splitting its product-design and manufacturing divisions. Marvell Technology (MRVL) surged 9.6% after reporting better-than-expected fiscal second-quarter results.
### Other Markets
Asian markets experienced gains on Friday, with Japan's Nikkei 225 Index advancing 0.7% and Hong Kong's Hang Seng Index increasing by 1.1%.
In Europe, major markets ended the day slightly in the red. France's CAC 40 Index slipped by 0.1%, while the UK's FTSE 100 Index and Germany's DAX Index both closed marginally lower.
In the bond market, treasuries weakened throughout the session. Consequently, the yield on the benchmark ten-year note rose by 4.2 basis points to 3.909%.
