By Echo Wang
NEW YORK (Reuters) -Wall Street pulled back on Thursday as investors evaluated key economic indicators ahead of the Federal Reserve's meeting next week.
A Thursday Labor Department report showed U.S. producer prices rose more than forecast in November, though a moderation in service costs pointed to a continuation of the broader disinflationary trend. Initial claims for U.S. unemployment benefits unexpectedly climbed last week, raising concerns about labor-market resilience.
"Investors are just trying to suss out what is the Fed going to do next week? Is inflation really going to be a problem and the Fed has to really slow its role on rate cuts, or can they get there?" said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.
Haworth added there was profit-taking after the Nasdaq touched an all-time high on Wednesday.
The Nasdaq had surged past the 20,000 mark for the first time on Wednesday, driven by a strong rally in technology stocks. Meanwhile, the S&P 500 reached its highest level in nearly a week, buoyed by an inflation report that solidified expectations for a 25-basis-point rate cut at the Fed's Dec. 17-18 meeting.
Trader bets on the cut next week stand at over 98%, according to CME's FedWatch Tool. However, they indicate expectations of a pause in January after several Fed officials last week urged caution over the pace of monetary policy easing as the economy remained resilient.
The Dow Jones Industrial Average fell 234.44 points, or 0.53%, to 43,914.12, the S&P 500 lost 32.94 points, or 0.54%, to 6,051.25 and the Nasdaq Composite lost 132.05 points, or 0.66%, to 19,902.84.
Megacap and growth stocks exhibited mixed results, with Nvidia (NASDAQ:NVDA) declining 1.4%, while Microsoft (NASDAQ:MSFT) gained 0.1%.
Adobe (NASDAQ:ADBE) plunged 13.7% after the Photoshop maker forecast fiscal 2025 revenue below Wall Street expectations, weighing on the broader technology sector.
Of the 11 major S&P sub-sectors, only consumer staples stocks gained.
Wall Street's main indexes have hit record highs multiple times this year, fueled by a rally in heavyweight tech stocks that capitalized on enthusiasm surrounding artificial intelligence and the Fed's interest-rate cuts.
U.S. equities concluded a strong November following Donald Trump's presidential election victory, buoyed by expectations of business-friendly policies boosting corporate profits, and have started December on a broadly positive trajectory.
Warner Bros. Discovery (NASDAQ:WBD) soared 15.4% after the media company announced plans to separate its declining cable-TV business from streaming and studio operations.
Nordson (NASDAQ:NDSN) slid 8.2% as the dispensing-equipment maker forecast fiscal 2025 revenue below Wall Street estimates, while health insurer Centene (NYSE:CNC) rose 1.9% after forecasting its 2025 profit above estimates.
Declining issues outnumbered advancers by a 3.11-to-1 ratio on the NYSE. On the Nasdaq, 1,209 stocks rose and 3,106 fell as declining issues outnumbered advancers by a 2.57-to-1 ratio.
The S&P 500 posted 10 new 52-week highs and nine new lows while the Nasdaq recorded 86 new highs and 154 new lows.
Volume on U.S. exchanges was 13.61 billion shares, compared with the 14.17-billion average for the full session over the last 20 trading days.