NEW YORK, May 31 (Reuters) - The S&P 500 and Nasdaq posted losses for the week on Friday, breaking their five-week winning streaks, as investors digested an inflation report and assessed when the Federal Reserve might begin cutting interest rates.
The Dow rallied on the day.
The technology sector (.SPLRCT), opens new tab dipped. An index of semiconductors (.SOX), opens new tab was down, while shares of Dell (DELL.N), opens new tab plummeted after it forecast current-quarter profit below market estimates and signaled that higher costs to build servers that meet heavy AI workloads would dent its annual margins.
The U.S. personal consumption expenditures (PCE) price index increased 0.3% last month, the Commerce Department's Bureau of Economic Analysis reported, matching the unrevised gain in March.
Consumer spending slowed more than expected, it added.
"People were pleased that it wasn't hotly surprising but also underneath the surface, the consumer continues to show a little bit of strain," said Carol Schleif, chief investment officer at the BMO family office in Minneapolis.
"It's coming through when you look at the sector performances in the market. ... Consumer discretionary is down at the bottom of the list of sector performers today."
Traders of futures tied to the Fed policy rate added to bets of roughly even odds that the central bank will begin to cut rates in September and boosted the chances of a second rate cut in December to about the same probability.
According to preliminary data, the S&P 500 (.SPX), opens new tab gained 44.53 points, or 0.85%, to end at 5,280.01 points, while the Nasdaq Composite (.IXIC), opens new tab lost 2.06 points, or 0.01%, to 16,735.02. The Dow Jones Industrial Average (.DJI), opens new tab rose 595.78 points, or 1.56%, to 38,707.26.
Tech and chip stocks, which have led Wall Street's recent rally, retreated this week as a spike in Treasury yields pressured riskier assets.
Among gainers, Zscaler (ZS.O), opens new tab jumped after the security solutions provider forecast fourth-quarter results above estimates.
Gap (GPS.N), opens new tab surged after the apparel maker raised its annual sales forecast and its first-quarter results beat market expectations, in fresh signs that its turnaround strategy was starting to work.
Trump Media & Technology Group (DJT.O), opens new tab fell after a New York jury convicted former President Donald Trump of falsifying documents to cover up a hush money payment to a porn star ahead of the 2016 elections.
(This story has been corrected to say tech sector dipped and to remove the reference to consumer discretionary sector ending lower, in paragraph 3)
Reporting by Abigail Summerville in New York and Johann M Cherian and Lisa Pauline Mattackal in Bengaluru; Additional reporting by Pranav Kashyap; Editing by Pooja Desai and Richard Chang
