U.S. Stocks Edge Lower as Investors Await Fed's Next Move

U.S. stocks saw a downturn on Friday following a significant rally driven by the Federal Reserve's interest-rate cut. Despite the drop, major indices remained poised for weekly gains. Investors are closely watching comments from Fed governors about future rate cuts. Key sectors, including industrials, experienced declines.

U.S. stocks dipped on Friday as investors took a breather following Thursday's robust rally spurred by the Federal Reserve's larger-than-expected interest-rate cut. Despite the downturn, the S&P 500, Dow Jones Industrial Average, and Nasdaq were on track for weekly gains of at least 1%, remaining near record highs.

Investor sentiment briefly rebounded after Fed Governor Christopher Waller hinted at a potential 50 basis points rate cut in November. However, Fed Governor Michelle Bowman's comments underscored a preference for a smaller cut, causing further market recalibration. "The market is still trying to recalibrate because of mixed expectations," said Sid Vaidya, U.S. Chief Wealth Strategist at TD Wealth in New York. "Growth is expected to slow, so investors need to be selective."

The Dow dropped 93.70 points, or 0.22%, to 41,931.84; the S&P 500 fell 28.24 points, or 0.49%, to 5,685.40; and the Nasdaq lost 109.51 points, or 0.61%, to 17,904.48. Although nine of the eleven major S&P sectors were down, utilities surged due to Constellation Energy's 21.58% jump after a data center deal with Microsoft. FedEx plunged 13.92% on a downbeat revenue forecast, pulling the Dow Jones Transport index down 3.39%. Nike rose 5.55% with news of the return of former senior executive Elliott Hill as CEO successor. Declining issues outnumbered advancers on both the NYSE and Nasdaq.

(With inputs from agencies.)