US STOCKS-Wall St mixed after rally, but indexes on track for weekly gains

By Purvi Agarwal and Ragini Mathur

Sept 12 (Reuters) - The S&P 500 and the Nasdaq hit record highs on Friday in mixed trading, while Wall Street's main indexes remained on track to log gains in a week of economic reports that solidified expectations for interest rate cuts.

Microsoft MSFT.O gained 2.1% after the technology giant avoided a possible hefty EU antitrust fine by offering customers reduced prices for Office products excluding Teams.

It boosted the information technology sector .SPLRCT on the S&P 500, and helped lift the tech-heavy Nasdaq. Microsoft was among the only bright spots on the blue-chip Dow.

Declines in Goldman Sachs GS.N and paint-maker Sherwin-Williams SHW.N bogged down the Dow.

On the S&P 500, eight out of the 11 sectors were trading lower, with miners .SPLRCM the biggest losers, down 1.1%. Gains in tech stocks countered broader declines.

"It's a bit of a risk-off trade as we've had a big move in the past couple of weeks here ... the tech space is holding up well as markets are very enthusiastic around AI and capital spending," said Mark Hackett, chief market strategist at Nationwide.

"But the rest of the market just feels a little exhausted at this point."

The University of Michigan's survey showed U.S. consumer sentiment fell for a second straight month in September as consumers saw rising risks to business conditions, the labor market and inflation.

At 12:09 p.m. ET, the Dow Jones Industrial Average .DJI fell 187.60 points, or 0.41%, to 45,918.17, the S&P 500 .SPX lost 1.79 points, or 0.03%, to 6,585.68 and the Nasdaq Composite .IXIC gained 80.83 points, or 0.37%, to 22,123.90.

Traders are fully pricing in a 25-basis point interest rate cut and also see 5.5% expectations of a larger 50 bps trim at the Fed's monetary policy meeting next week, after a series of recent datasets pointed to a worsening U.S. jobs market.

A monthly inflation report on Thursday kept the U.S. central bank on track to cut rates, with market pricing now reflecting expectations for nearly three quarter-point cuts by the end of the year.

All three major indexes are poised to record weekly gains, largely helped by a revival in artificial intelligence trade after cloud computing giant Oracle's ORCL.N upbeat forecast on Tuesday.

It sparked a rally in AI-linked semiconductors and utilities companies powering data centers earlier in the week, setting up the S&P 500 information technology sector to outperform peers this week.

The indexes are in positive territory for September so far - a month that is deemed bad for U.S. equities historically, where the benchmark S&P 500 has shed 1.5% on average since 2000, data compiled by LSEG showed.

Among stocks, Warner Bros Discovery WBD.O was 12.5% higher, extending Wednesday's over 28% gains, as a source said Paramount Skydance PSKY.O was preparing a bid for the Hollywood studio.

Shares of vaccine makers fell after a report said U.S. health officials are planning to link coronavirus vaccines to the deaths of 25 children.

Moderna MRNA.O fell 8.2%, while Pfizer PFE.N and Novavax NVAX.O dropped 3% and 4.5% respectively.

Declining issues outnumbered advancers by a 2.08-to-1 ratio on the NYSE and by a 1.99-to-1 ratio on the Nasdaq.

The S&P 500 posted 19 new 52-week highs and two new lows, while the Nasdaq Composite recorded 81 new highs and 23 new lows.