US STOCKS-Wall Street's main indexes drift higher after inflation data

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Updates to mid-session trading

By Johann M Cherian and Sukriti Gupta

Feb 28 (Reuters) - Wall Street's main indexes rose in choppy trading on Friday, rebounding from several sessions of declines, while a drop in Treasury yields further aided risk-taking after data showed inflation rose as expected last month.

A Commerce Department report showed that inflation rose in line with expectations in the previous month. However, consumer spending dropped as households stocked up on goods ahead of the Donald Trump administration's telegraphed tariff.

At 11:34 a.m. ET, the Dow Jones Industrial Average .DJI rose 198.90 points, or 0.46%, to 43,438.40, the S&P 500 .SPX gained 23.69 points, or 0.40%, to 5,885.26 and the Nasdaq Composite .IXIC gained 72.89 points, or 0.39%, to 18,615.92.

Ten of the 11 S&P 500 sectors rose, led by consumer discretionary stocks' .SPLRCD 0.8% rise as yield on near-term bonds US2YT=RR dropped to levels not seen since October. US/

The CBOE Volatility Index .VIX dropped to 20.96 points after touching a one-month high earlier in the session.

Traders broadly expect the Fed to lower interest rates twice by December, according to data compiled by LSEG, and comments from Chicago Fed President Austan Goolsbee due later in the day will be parsed for his insights on the central bank's stance.

"Some consumers nixed spending in January due to fears of job losses, tariffs raising the cost of living, and the immigration crackdown," said Bill Adams, chief economist for Comerica Bank.

"But many more probably only delayed spending, since winter weather swept much of the Sunbelt and discouraged nonessential trips to car dealerships and open houses."

Friday's report is important for investors trying to gauge the central bank's next policy move, after policymakers reiterated a hawkish stance on interest rates. The fear has been that the new Trump administration's policies, especially trade restrictions, could lead to a rise in domestic inflation and hamper economic growth.

The following week will be crucial for markets as Trump's deadline to the one-month pause to Canadian and Mexican tariffs will end, while a batch of pivotal jobs reports are also on tap.

Concerns that tech companies such as Nvidia NVDA.O and Microsoft MSFT.O might be overspending on artificial-intelligence infrastructure have also put Wall Street indexes on track for monthly declines.

The benchmark S&P 500 logged declines in five of the past six sessions and is set for its biggest one-month drop since April 2024. The tech-heavy Nasdaq is down about 9% from its all-time high and is headed for its steepest one-month fall since September 2023.

Nvidia rose 1.1% after an 8.5% slide in the previous session, after the chip giant issued a weaker-than-expected quarterly gross margin forecast.

Dell DELL.N lost 5.8% as the PC maker forecast a decline in its adjusted gross margin rate for fiscal 2026.

Peer HP Inc HPQ.N fell 6.8% after its quarterly profit forecasts missed expectations.

Trump's latest threat to slap an extra 10% duty on imports from China hit U.S.-listed China stocks such as Alibaba BABA.N and Xpeng XPEV.N, which fell 2.7% and 3.9%, respectively.

NetApp NTAP.O plunged 16% after the data storage firm lowered its forecast for annual results.

Advancing issues outnumbered decliners by a 1.84-to-1 ratio on the NYSE and by a 1.27-to-1 ratio on the Nasdaq.

The S&P 500 posted 27 new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 25 new highs and 266 new lows.