Weak Intel forecast drags S&P 500, ends streak of record highs

The S&P 500 ended a five-session streak of record highs on Friday, with Intel slumping after a bleak revenue forecast, while US economic data showed inflation moderating.

Even as the S&P 500 and Nasdaq ended the session lower, all three major indexes recorded their third straight weekly gain and their 12th weekly advance out of 13.

A US Commerce Department report showed the personal consumption expenditure index - the Federal Reserve's preferred inflation gauge - rose moderately in December. This kept the annual increase in inflation below 3per cent for a third-straight month and bolstered the case for rate cuts this year.

On Thursday, data showed a strong fourth-quarter US economic growth reading.

"These are good numbers," said Peter Cardillo, Chief Market Economist at Spartan Capital Securities in New York. "Taken with yesterday’s GDP numbers, this report strengthens the possibility of a soft landing, which continues to gain traction."

Intel tumbled 11.9 per cent to a six-week low after it gave a revenue forecast that badly missed estimates as it plays catch-up in the AI race while also dealing with a weak PC market.

Chip manufacturing tools maker KLA Corp dropped 6.6 per cent following its disappointing third-quarter revenue forecast.

The Philadelphia SE Semiconductor index fell 2.9 per cent, down for a second day after closing at a record high on Wednesday.

The S&P 500 declined 0.07 per cent to end the session at 4,890.97 points.

The Nasdaq declined 0.36 per cent to 15,455.36 points, while Dow Jones Industrial Average rose 0.16 per cent to 38,109.43 points. For the week, the S&P 500 added 1.06 per cent, the Dow gained 0.65 per cent and the Nasdaq advanced 0.94 per cent.

The S&P 500 in recent sessions returned to record highs for the first time in two years, extending a rally driven by optimism about the economy and lower interest rates, as well as bets on artificial intelligence.

Of the S&P 500 companies that have reported earnings so far, 78.2 per cent have surpassed expectations, LSEG data showed, compared with a long-term average beat rate of 67per cent.

Tesla (TSLA.O), recovered 0.3per cent, a day after the electric car maker slid 12per cent following a warning of slower growth in 2024.

American Express jumped 7.1per cent and hit a record high after the credit card firm forecast a higher-than-expected annual profit. Visa declined 1.7 per cent after the world's largest payments processor's tepid current-quarter revenue growth forecast.

Apple fell 1per cent ahead of its quarterly report next Thursday. The iPhone maker and Intel were among the stocks weighing most on the S&P 500.

Colgate-Palmolive rose 2per cent after the toothpaste maker posted upbeat fourth-quarter results.

Volume on US exchanges was relatively light, with 9.6 billion shares traded, compared to an average of 11.6 billion shares over the previous 20 sessions.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

The S&P 500 posted 36 new highs and 1 new lows; the Nasdaq recorded 93 new highs and 77 new lows.