by Noel Randewich and Lisa Pauline Mattackal

(Reuters) – The New York Stock Exchange ended mixed on Thursday, with only the Dow Jones Industrial Average in positive territory while the Nasdaq Composite posted a sharp decline as investors shifted away from big technology stocks to smaller companies after data fueled speculation that interest rates could be cut in September.

The Dow Jones index gained 0.08% to 39,753.75.

The broader S&P 500 lost 0.88% to 5,584.54 points.

The Nasdaq Composite fell by 1.95% to 18,283.41 points.

This is a setback for the Nasdaq, after seven consecutive record closing highs, and for the S&P-500, which had experienced six consecutive sessions of gains.

A report from the US Department of Labor released today showed that US consumer prices unexpectedly declined in June and posted their smallest increase in a year, fueling the scenario of monetary easing by the Federal Reserve (Fed).

According to CME Fedwatch data, traders are now more than 90% betting on a rate cut after the U.S. central bank’s September meeting, up from 74% on Wednesday.

Investors now await the release of the U.S. producer price report on Friday for additional data on inflation, before also looking ahead to the start of the quarterly earnings season with major banks.

Despite signs of a decline in inflation, major stock capitalizations posted losses during the day’s session, including Meta Platforms, which lost about 4%, Microsoft and Amazon, both down more than 2%.

Tesla plunged 8.4%, its worst decline since last January, after Bloomberg reported that the electric vehicle maker was delaying the launch of its robotaxi by two months to October.

Shares of smaller companies, meanwhile, ended higher.

“It seems like investors now think the Fed is ready to start cutting interest rates. And they’re showing that’s enough for them, that they don’t need to wait for it to do so,” said Sam Stovall, chief strategist at CFRA Research.

Among the major sectors of the S&P 500, real estate rose 2.7%, while communication services and information technology fell more than 2%.

On the stock front, among the notable moves was a 4% drop in Delta Air Lines, which said it expected lower-than-expected profits in the current quarter. Other major airlines also declined.

That could be a sign that this is a sector where consumers are particularly feeling the pinch of inflation, according to Scott Helfstein, chief investment officer of Global X. “You see that in discretionary spending, like airline tickets,” he said.

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(Written by Jean Terzian)

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