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 8.3% after the software maker said Bret Taylor would step down as co-chief executive officer in January.
Dollar General Corp fell 7.5% after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp dropped 6.6% after the membership-only retail chain reported slower sales growth in November.
The S&P 500 declined 0.08% to end the session at 4,076.79 points.
The Nasdaq gained 0.13% to 11,482.45 points, lifted by gains of over 1% each in Nvidia and Facebook-owner Meta Platforms.
Dow Jones Industrial Average declined 0.56% to 34,396.53 points, pulled lower by Salesforce.
Of the 11 S&P 500 sector indexes, seven declined, led lower by financials, down 0.71%, followed by a 0.47% loss in consumer staples.
A U.S. Labor Department report 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%.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio.
The S&P 500 posted 32 new highs and no new lows; the Nasdaq recorded 118 new highs and 91 new lows.
Volume on U.S. exchanges was relatively heavy, with 11.7 billion shares traded, compared to an average of 11.3 billion shares over the previous 20 sessions.
(Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio)