Wall Street stocks are down slightly, ending a three-week streak of gains for the S&P 500

Despite a pessimistic end, the S&P 500 and the Nasdaq remain close to their historical highs.

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 selloff could reflect traders taking profits as the market nears all-time highs or rebalancing their portfolios as the second quarter draws to a close, said Ross Mayfield, an investment strategy analyst at Baird.

“I wouldn't be surprised at all if there was some profit taking today, especially from stocks that have really gone up,” Mayfield said. “This may be why we are seeing some additional weakness from large tech companies relative to the rest of the market. »

The market headed higher early following a closely watched report that showed inflation continues to declineInvestors 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.

According to the latest personal consumption expenditure (PCE) index, consumer prices rose 2.6% in May compared with a year earlier, a continuation of the decline from 2.7% in April and well below the peak of 7.1% 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 inflation measure 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 that the Fed will begin cutting interest rates at its September meeting.

Treasury yields rose in the bond market after initially losing ground following the latest signal of slowing inflation. The yield on the 10-year Treasury note, 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 the Fed's actions, 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, have also confirmed that price pressure has eased.

Consumers continue to feel the pressure of inflation, despite a significant decline from its peak, and recent data show that spending is weakening and weighing on economic growth. The Fed’s goal was to slow economic growth enough to cool inflation, but not so much that the economy slides into recession.

This combination of lower inflation and consumers being much more cautious in their spending habits has the market pricing in 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 be informed next week about job openings, unemployment and hiring.

Nike fell 20%, the biggest drop among S&P 500 stocks, after the athletic shoe and apparel maker missed Wall Street revenue targets and cut its sales forecast for the entire exercise. Company executives said they expected a single-digit sales decline 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 Index closed its final trading day of June up 3.5% for the month. The index is up about 14.5% since the start of the year.

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 Jones lost 45.20 points to 39,118.86. The Nasdaq slid 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.