US equity indexes closed mixed this week as investors booked profit in mega-cap technology and communication services names while adding exposure in utilities, healthcare, and industrials as the probability of an interest-rate cut in September approached near-certainty.
* The Dow Jones Industrial Average ended at 40,589.34 on Friday, up from 40,287.53 a week ago. The Nasdaq Composite closed at 17,357.88 versus 17,726.94 a week prior. The S&P 500 closed at 5,459.10, compared with 5,505.0 a week earlier.
* Tesla (TSLA) and Alphabet (GOOG, GOOGL) posted disappointing quarterly results, hitting the Nasdaq and S&P 500 and calling into question the ability of the Magnificent Seven group of stocks to continue carrying markets. Advanced Micro Devices (AMD), Nvidia (NVDA), Qualcomm (QCOM), Meta Platforms (META), and Apple (AAPL) ended the week lower.
* Technology and communication services were laggards this week, while utilities, healthcare, and industrials were the top gainers. Over a month, technology and communication services were the steepest decliners, signaling a rotation out of the two sectors that account for a chunk of the S&P 500 and Nasdaq gains year-to-date.
* Treasury yields fell across most maturities this week reflecting an economic slowdown that could prompt the Federal Reserve to begin easing policy. Late Friday, the 10- and two-year yields headed for a weekly drop, trading at 4.19% and 4.39%, respectively.
* The personal consumption expenditures price index eased to 2.5% annualized in June from 2.6% in May but was above the Street's 2.4% forecast. The Fed's preferred core measure was flat at 2.6% versus the 2.5% consensus. Inflation grew 0.1% sequentially in June from unchanged in May, while the core measure climbed 0.2% from 0.1%. Both metrics met expectations.
* According to the FedWatch Tool, the probability of a Fed rate cut in September stood at 95% late Friday as inflation continued to cool in June after the earlier reprieve in May.
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