Wall St mixed after consumer spending falls in January

Wall Street's main indexes are mixed in choppy trading as investors avoid large bets after data showed consumer spending fell in January, exacerbating worries that the world's largest economy might be stalling.

A Commerce Department report showed that inflation rose in line with expectations in the previous month.

However consumer spending, which accounts for more than two-thirds of the economy, dropped 0.2 per cent after an upwardly revised 0.8 per cent increase in December.

"Spending came in lower than we were looking for... most of it I would attribute to a cooling economy, which presents a dilemma for the Fed in the sense that you still have inflation and you have an economy that is moving lower. If you add them together, that equals stagflation," Peter Cardillo, chief market economist at Spartan Capital Securities.

Friday's report is important for investors trying to gauge the US central bank's next policy move, after policy makers reiterated a hawkish stance on interest rates.

The fear has been that President Donald Trump's administration policies, especially trade restrictions, could lead to a rise in domestic inflation.

Traders expect the Fed to lower borrowing costs twice by December, little changed from before the report, according to data compiled by LSEG.

Investors will assess comments from Chicago Fed president Austan Goolsbee later in the day.

In early trading on Friday, the Dow Jones Industrial Average rose 204.26 points, or 0.47 per cent, to 43,443.76, the S&P 500 gained 6.10 points, or 0.10 per cent, to 5,867.67 and the Nasdaq Composite lost 47.51 points, or 0.26 per cent, to 18,490.55.

Sectors that fare better in times of economic uncertainties such as consumer staples and utilities rose about 1.0 per cent each.

On the flip side, technology stocks limited gains.

The CBOE Volatility Index, also known as Wall Street's fear gauge, touched a one-month high and was last up at 21.26 points.

Multiple recent reports suggesting a stalling economy and concerns that tech companies such as Nvidia and Microsoft might be overspending on artificial-intelligence infrastructure have put Wall Street's main indexes on track for monthly declines.

The benchmark S&P 500 logged declines in five of the past six sessions and is set for its biggest one-month drop since April 2024.

The tech-heavy Nasdaq is down about 9.0 per cent from its all-time high and is headed for its steepest one-month fall since September 2023.

Nvidia fell 1.9 per cent after an 8.5 per cent slide in the previous session, after the chip giant's weaker-than-expected quarterly gross margin forecast overshadowed an upbeat revenue outlook.

Dell lost 5.7 per cent as the PC maker forecast a decline in its adjusted gross margin rate for fiscal 2026.

Peer HP Inc fell 6.6 per cent after its quarterly profit forecasts missed expectations.

Trump's latest threat to slap an extra 10 per cent duty on imports from China hit US-listed China stocks such as Alibaba and Xpeng, which fell 3.2 per cent and 6.5 per cent respectively.

NetApp plunged 11.3 per cent after the data storage firm lowered its annual results forecast.

Walgreens fell 4.8 per cent after a report said private equity firm Sycamore Partners is closing in to buy out the pharmacy chain.

Advancing issues outnumbered decliners by a 1.46-to-1 ratio on the NYSE while declining issues outnumbered advancers by a 1.24-to-1 ratio on the Nasdaq.

The S&P 500 posted 27 new 52-week highs and 10 new lows while the Nasdaq Composite recorded 21 new highs and 228 new lows.