By Caroline Valetkevitch
NEW YORK (Reuters) -The S&P 500 and Nasdaq edged lower on Wednesday as investors took profits in chipmaker stocks, while they braced for producer price data and further clues on the inflation trend ahead of next week's Federal Reserve meeting.
An index of semiconductors eased 2.5% after recent strong gains, but was up 17% for the year to date. Shares of Nvidia (NASDAQ:NVDA), which have led the recent rally fueled by optimism about artificial intelligence, fell 1.1%.
Investors are looking ahead to Nvidia's global GTC developer conference on AI from March 18-21 and any AI-related announcements.
Intel (NASDAQ:INTC) shares fell 4.4%. Bloomberg reported that the Pentagon had pulled out of a plan to spend as much as $2.5 billion on a chip grant to the company.
February U.S. producer price data due on Thursday could offer further insight into the inflation picture.
"The last reading actually helped to underscore the hotter inflation trend. So this is going to be important," said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina.
While the U.S. central bank is widely expected to leave interest rates unchanged when it meets next week, traders see a 65% chance of the first rate cut coming in June, the CME FedWatch Tool showed.
The Dow Jones Industrial Average rose 37.83 points, or 0.1%, to 39,043.32. The S&P 500 lost 9.96 points, or 0.19%, at 5,165.31 and the Nasdaq Composite dropped 87.87 points, or 0.54%, to 16,177.77.
Tuesday's slightly hotter-than-expected consumer price data failed to dampen hopes of rate cuts in the coming months.
Monthly U.S. retail sales data also is due on Thursday.
Among other declining shares, Dollar Tree (NASDAQ:DLTR) slumped 14.2% after the discount store chain said it would close nearly 1,000 stores and posted a net loss in the previous quarter, hurt by an over-$1 billion goodwill impairment charge.
McDonald's (NYSE:MCD) shares fell 3.9% after its chief financial officer said international sales could fall sequentially in the current quarter.
Volume on U.S. exchanges was 11.12 billion shares, compared with the 12 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered decliners on the NYSE by a 1.53-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.
The S&P 500 posted 59 new 52-week highs and no new lows; the Nasdaq Composite recorded 89 new highs and 110 new lows.