Stocks fell on Wall Street, ending a three-week winning streak for the S&P 500

The decline in major technology stocks, which were the big winners from the record market rise, weighed on the market. Apple fell 1.6%, Microsoft fell 1.3% and Meta Platforms finished down 3%.

The late afternoon wave of selling could reflect traders taking profits as the market near all-time highs, or rebalancing their portfolios as the end of the second quarter approaches. said Ross Mayfield, investment strategy analyst at Baird.

“It wouldn’t surprise me at all if there was some profit-taking today, particularly in the stocks that have really rallied,” Mayfield said. That may be why we’re seeing a little bit of additional weakness in big tech relative to the rest of the market.

The market rose early on a closely watched report that showed inflation continues to fall. Investors are hoping that slowing inflation will prompt the Federal Reserve to start cutting interest rates, which remain at their highest level in more than 20 years.

Consumer prices rose 2.6% in May from a year ago, according to the latest index of personal consumption expenditures, or PCE. This reflects continued easing from the 2.7% figure recorded in April and is significantly lower than the peak of 7.1% recorded two years ago.

This is moving in the right direction and is what the Fed needs to make the decision to cut rates, said Quincy Krosby, chief global strategist at LPL Financial.

PCE is the Fed’s preferred measure of inflation, and the latest data is encouraging for economists and investors hoping for rate cuts to help ease pressure on the market and borrowers. Wall Street is betting the Fed will start cutting interest rates at its September meeting.

Treasury yields rose in the bond market after initially losing ground on the latest signal of slowing inflation. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, rose to 4.38%, from 4.30% just before the PCE data was released. The yield on the two-year Treasury note, which more closely tracks expectations for Fed action, rose to 4.74%, from 4.72% just before the data was released.

The Fed raised interest rates to their highest level in more than two decades in an effort to bring inflation back to its 2% target. Other measures of inflation, including the popular consumer price index, also confirmed that price pressure has eased.

Consumers are still feeling the pressure of inflation, despite the significant slowdown from its peak, and recent data have shown that spending is weakening and weighing on economic growth. The Fed's goal was to slow economic growth enough to curb inflation, but not so much that the economy falls into a recession.

This combination of lower inflation and more cautious consumers in their spending habits allows the market to see the possibility of a rate cut in September, Krosby said.

The strength of the jobs market has been another important factor in economic growth, but it has also shown signs of weakening. Wall Street will receive updates next week on job openings, unemployment and hiring.

Nike fell 20%, the biggest decline among S&P 500 stocks after the athletic footwear and apparel company missed Wall Street revenue targets and cut its full-year sales forecast. Company executives said they expected sales to decline in the single digits in the current fiscal year, citing a challenging environment.

Nike's dour outlook has dragged other sportswear companies down with it. Foot Locker fell 2.4%, Skechers lost 1% and Under Armor fell 2.6%.

More retailers, particularly those focused on non-essential items, are warning of a slowdown in consumer spending. Consumers barely increased their spending in May compared to April, according to the government's latest retail sales report.

Gains in financial sector stocks helped limit the S&P 500's decline. JPMorgan Chase rose 1.6% and Wells Fargo closed up 3.4%.

The S&P 500 closed its final trading day of June with a 3.5% gain for the month. The index is up about 14.5% year to date.

The Nasdaq gained about 6% for the month and is up 18.1% this year.

Overall, the S&P 500 fell 22.39 points to 5,460.48. The Dow lost 45.20 points to 39,118.86. The Nasdaq slipped 126.08 points to close at 17,732.60.

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AP Business writers Yuri Kageyama and Matt Ott contributed to this report.