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S&P 500, Nasdaq extend win streaks to five

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U.S. CPI rises as expected in July

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Alphabet dips after report US mulls Google break-up

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VIX records fastest ever drop from high-fear range

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Indexes up: Dow 0.61%, S&P 500 0.38%, Nasdaq 0.03%

(Adds closing prices)

By David French

Aug 14 (Reuters) - The S&P 500 ended higher on

Wednesday, stretching its winning streak to five sessions, as

the latest inflation data reassured investors betting the

Federal Reserve would start cutting U.S. interest rates next

month.

The Nasdaq Composite also posted its fifth straight daily

gain, although it barely scraped into positive territory as

Alphabet and some megacap tech stocks weighed.

Moves were generally subdued with many investors away for

August vacations, and new triggers for trading were absent,

contributing to an overall listless picture among the

benchmarks.

The latest U.S. consumer price data, released earlier on

Wednesday, reinforced expectations that the Fed would start

interest rate cuts in September.

U.S. consumer prices rose moderately in July, and the annual

increase in inflation slowed to below 3% for the first time

since early 2021. A day earlier, softer-than-expected producer

prices data indicated inflation continued to moderate, although

not yet all the way to the U.S. central bank's 2% target.

Money markets now see a 55% chance of a 25-basis point (bps)

rate cut at the Fed's Sept. 17-18 meeting, as per the CME

FedWatch Tool. Before the data, traders were nearly evenly split

between a 25-bps and 50-bps cut.

Scott Ladner, chief investment officer at Horizon

Investments, said he called days such as this "markets violently

going nowhere", adding with CPI painting a similar picture to

PPI data, there was no reason for traders to reassess moves put

in place on the previous day.

"There's no huge rationale to move prices one way or

another," he said.

The S&P 500 closed at 5,455.21, up 0.38% or 20.78

points. The Nasdaq Composite closed at 17,192.60, up

0.03% or 4.99 points. The Dow Jones Industrial Average

closed up 242.75 points or 0.61% at 40,008.39.

Shares of Alphabet, the Google-parent, dropped

2.3% on a media report that the U.S. Department of Justice is

considering options that include breaking up the online search

engine.

Other megacaps were mixed: Tesla slumped 3.1% and

Meta Platforms ( META ) dropped 0.3%, while Microsoft ( MSFT ) fell 0.7%

and Nvidia ( NVDA ) declined 1.7%.

A rebound in megacap and tech stocks has helped markets

recoup most losses from a global market rout early this month

after data showed the U.S. unemployment rate surged in July.

Thursday's release by the Commerce Department's Census

Bureau of retail sales data will be keenly watched by those

concerned about the overall strength of the American economy,

Horizon's Ladner said.

These worries had sent the Cboe volatility index,

Wall Street's fear gauge, to its highest since 2020 just last

week. However, on Wednesday, it stayed below its long term

average of 20 points for the second day to close at 16.19.

The seven trading sessions it took the VIX to return to its

long-term median of 17.6 is the index's quickest ever drop from

35, a level associated with a high degree of fear, according to

a Reuters analysis.

A majority of the major S&P sectors were in positive

territory, led by a 1.3% rise in financials. Its advance

was aided by gains of more than 4.6% by Progressive and

Charles Schwab ( SCHW ), which rose after positive July

performance numbers, and Allstate ( ALL ), which climbed after

agreeing to sell a business unit.

Both of the insurers ended at record closing highs.

Kellanova ( K ) surged 7.8% after family-owned candy giant

Mars said it would buy the Cheez-It and Pringles maker in a

nearly $36 billion deal.

Cardinal Health ( CAH ) gained 3.7% after the drug

distributor raised its 2025 profit forecast.