- Salesforce drops on co-CEO exit plan
- Dollar General falls on slashing annual profit view
- U.S. manufacturing shrinks for first time in 2-1/2 years in Nov
Dec 1 (Reuters) - Wall Street ended mixed on Thursday as a selloff in Salesforce weighed on the Dow, while traders digested U.S. data that suggested the Federal Reserve's interest rate hikes are working.
On Wednesday, the S&P 500 surged over 3% on optimism the Fed might moderate its campaign of interest rate hikes.
U.S. manufacturing activity shrank in November for the first time in 2-1/2 years as higher borrowing costs weighed on demand for goods, data showed, evidence the Fed's rate hikes have cooled the economy.
The personal consumption expenditures (PCE) price index rose 0.3%, the same as in September, and over the 12 months through October the index increased 6.0% after advancing 6.3% the prior month.
Excluding the volatile food and energy components, the PCE price index rose 0.2%, one-tenth less than expected, after gaining 0.5% in September.
"On a normal day, the package of data this morning would be pretty risk-on, but after the rally yesterday, I think it's not quite good enough to push another leg higher," said Ross Mayfield, an investment strategy analyst at Baird.
Wednesday's rally drove the S&P 500 index above its 200-day moving average for the first time since April after Fed Chair Jerome Powell said it was time to slow the pace of interest rate hikes.
Traders now see a 79% chance the Fed will increase its key benchmark rate by 50 basis points in December and a 21% chance it will hike rates by 75 basis points.
Salesforce Inc tumbled after the software maker said Bret Taylor would step down as co-chief executive officer in January.
Dollar General Corp fell after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp dropped after the membership-only retail chain reported slower sales growth in November.
According to preliminary data, the S&P 500 lost 2.31 points, or 0.06%, to end at 4,077.80 points, while the Nasdaq Composite gained 15.22 points, or 0.13%, to 11,483.21. The Dow Jones Industrial Average fell 193.24 points, or 0.56%, to 34,397.42.
A report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended Nov. 26.
Investors now await nonfarm payrolls data on Friday for clues about how rate hikes have affected the labor market.
With a month left in 2022, the S&P 500 is down about 14% year to date, and the Nasdaq has lost about 27%. (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio)