Aug 30 (Reuters) - The Nasdaq and the S&P 500 inched up in choppy trading on Friday ahead of the long weekend, after signs of moderating price pressures strengthened bets for an interest-rate cut at the Federal Reserve's upcoming meeting in September.
The Personal Consumption Expenditure index, the central bank's preferred inflation gauge, rose 2.5% in July on an annual basis, compared to an estimate of 2.6%, according to economists polled by Reuters. On a monthly basis, it rose 0.2% as expected.
Among rate-sensitive megacaps, Amazon.com (AMZN.O), and Microsoft (MSFT.O), added 1.8% and 0.4%, respectively. Chip stocks also rose, with Broadcom (AVGO.O), climbing 2.3% and Advanced Micro Devices (AMD.O), gaining 0.5%, aiding the Philadelphia SE Semiconductor index's (.SOX), 1.5% rise.
Friday's PCE report is the last one before the Fed's September meeting and follows Chair Jerome Powell's comments last week, when he expressed support for an imminent policy adjustment.
Odds of a 25-basis-point reduction stood at 67.5%, according to the CME Group's FedWatch Tool, while those of a 50-bps reduction were at 32.5%.
"The data bakes in further that there is going to be a start to the rate-cutting cycle," said Thomas Martin, senior portfolio manager at GLOBALT Investments.
Martin said investors remain focused on the labor market, with a slew of employment reports scheduled for the coming week.
Global markets are nearing the end of a tumultuous month for riskier assets, after signs of a sudden moderation in the labor market sparked recession fears in the United States in early August. The influence of the Japanese yen carry trade worsened the rout.
Risk-taking has improved since then, with the Dow (.DJI), hovering near record highs, as subsequent data including Thursday's upward revision to economic growth soothed investor nerves.
At 11:42 a.m. ET, the Dow Jones Industrial Average (.DJI), was down 86.41 points, or 0.21%, at 41,248.64, the S&P 500 (.SPX), was up 6.36 points, or 0.11%, at 5,598.32, and the Nasdaq Composite (.IXIC), was up 49.01 points, or 0.28%, at 17,565.44.
Most of the 11 S&P 500 sectors traded flat, but Consumer Discretionary (.SPLRCD), bucked the trend with a 0.7% advance. Energy (.SPNY), was the biggest laggard with a 0.6% drop, tracking lower oil prices.
The tech-focused Nasdaq (.IXIC), and the S&P 500 (.SPX), closed lower on Thursday after Nvidia (NVDA.O), failed to match sky-high investor expectations, despite upbeat results and a broadly in-line forecast. The AI-chip bellwether was up 0.4% after a 6.4% drop in the previous session.
The benchmark S&P 500 and the Dow are set for monthly gains, while the Nasdaq is on track to end August lower, if losses hold.
Among other stocks, Marvell Technology (MRVL.O), jumped 7.9% after forecasting third-quarter results above estimates.
Ulta Beauty (ULTA.O), slid 3.0% after it trimmed its annual results forecasts, while Intel (INTC.O), rose 9.2% following a report it was exploring options which could include a merger or a split.
Dell Technologies (DELL.N), advanced 3.4% after lifting its annual revenue and profit forecasts, opens new tab.
Trading volumes are expected to thin ahead of the extended weekend due to the Labor Day holiday.
Declining issues outnumbered advancers for a 1.06-to-1 ratio on the NYSE, and by a 1.16-to-1 ratio on the Nasdaq.
The S&P index recorded 57 new 52-week highs and one new low, while the Nasdaq recorded 63 new highs and 51 new lows.
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai
