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Wall Street’s main indexes drifted lower on Thursday, weighed down by a drop in shares of Cisco and Walmart following underwhelming forecasts, while optimism around peaking interest rates faded.

Shares of Cisco Systems shed 11.5% as the communications and networking firm cut its full-year revenue and profit forecasts on slowing demand for its networking equipment.

Walmart dropped 7.1% as the retail giant said that the U.S. consumer continued to exert caution with their spending in the face of inflation, even as it raised its annual forecast for sales and profit.

The company’s warning also weighed on shares of other retailers. Target, which had given a strong holiday quarter outlook on Wednesday, fell 1.0%, with the broader S&P 500 consumer staples index down 1.2% and among the biggest sectoral decliners.

Wall Street’s main indexes have rallied this week as evidence of cooling inflation in the world’s largest economy fueled hopes the U.S. Federal Reserve was most likely done hiking interest rates.

In a data-packed week, which saw the tech-heavy Nasdaq hit an over three-month high, markets also took comfort from the U.S. Senate’s passage of a stopgap spending bill to avert a government shutdown.

“I think the rally from the favorable recent economic data is justified. However, regional (Fed) authorities have very diverse opinions and (it) confuses investors,” said Peter Andersen, founder of Andersen Capital Management in Boston.

Cisco slumps after cutting annual profit, revenue forecasts

However, Andersen said he is still optimistic about the possibility of a soft landing for the economy and a year-end rally.

Keeping declines in check, U.S. Treasury yields moved lower after the Labor Department’s report showed weekly jobless claims rose more than expected, cementing bets that the Fed will not need to raise rates further.

While money markets have fully priced in a probability that the Fed will hold rates steady in its December meeting, they see about 62% odds of an at least 25 basis point rate cut in May, according to CME Group’s FedWatch tool.

Market participants will take monetary policy cues from a slew of Fed officials, including voting member and Fed Vice Chair for Supervision Michael Barr, who are slated to speak during the day.

At 9:40 a.m. ET, the Dow Jones Industrial Average was down 58.54 points, or 0.17%, at 34,932.67, the S&P 500 was down 2.41 points, or 0.05%, at 4,500.47, and the Nasdaq Composite was down 30.79 points, or 0.22%, at 14,073.05.

Among other stocks, Palo Alto Networks fell 7.4% after the cybersecurity company forecast its second-quarter billings below market expectations due to inflationary pressures.

Macy’s shares climbed 9.4% as the department store operator’s quarterly sales beat analysts’ estimates.

U.S.-listed shares of Chinese firms such as PDD Holdings O>, Baidu and Li Auto fell between 2% and 5% following “disappointing” talks between U.S. President Joe Biden and Chinese leader Xi Jinping and continued weakness in China’s property sector.

Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE and for a 1.45-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and no new low, while the Nasdaq recorded 14 new highs and 30 new lows.

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