Google-parent fell 3.6% after media reports said the US Department of Justice was considering options including dismantling the online search engine.
Losses in Alphabet weighed on the Nasdaq and dragged the communications services sector down 1.3%, the most among the 11 largest S&P 500 sectors.
A rally in megacap and technology stocks helped markets recover much of the losses from a global market rout earlier this month that was partly triggered by data showing a rise in the US unemployment rate in July.
Recent data shows that in July the US Consumer prices rose modestly and the annual rise in inflation slowed below 3% for the first time since early 2021.
“There is nothing here that would prevent the Fed from going ahead with a rate cut in September,” said David Doyle, head of economics at Macquarie.
“The pace of easing will depend heavily on data, with inflation and employment figures of particular importance.”
According to the CME FedWatch tool, money markets now expect the Fed’s Sept. 17-18 sees a 55% chance of a 25-basis point (bps) rate cut. Before the data, traders were about evenly split between 25-bps and 50-bps cuts.
The S&P 500 and Nasdaq both posted gains for a fourth straight session on Tuesday following softer-than-expected producer price data that showed inflation has continued to moderate, although it has yet to reach the US central bank’s 2% target.
At 11:18 a.m., the Dow Jones Industrial Average was up 92.75 points, or 0.23%, at 39,858.60, the S&P 500 was up 6.16 points, or 0.11%, at 5,440.63 and the Nasdaq lost 19% points, or 19%, at 55.69.
The Cboe Volatility Index, Wall Street’s gauge of fear, was at 16.49, a day after reaching its highest level since 2020 just last week, 20 points below its long-term average.
AI stocks Nvidia, Super Micro and Dell reversed early gains this week after strong recoveries, while most megacap and growth stocks were mixed.
Calanova rose more than 7.7% after family-owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a deal worth about $36 billion.
Cardinal Health rose 5.2% after the drug distributor raised its 2025 profit forecast.
Turbotax parent Intuit fell 1.9% after Morgan Stanley downgraded its rating to “equal-weight” from “overweight.”
Advancing issues beat decliners by a 1.25-to-1 ratio on the NYSE, while outpacing declining issues by a 1.46-to-1 ratio on the Nasdaq.
The S&P 500 posted 24 new 52-week highs and two new lows, while the Nasdaq Composite hit 45 new highs and 92 new lows.
(You can now subscribe to our ETMarkets WhatsApp channel)
