NEW YORK (AP) — U.S. stock indexes held roughly in place Monday ahead of an inflation report that could show how realistic Wall Street’s hopes for easier interest rates are.
The S&P 500 slipped 5.75 points, or 0.1%, to 5,117.94, coming off just its third losing week in the last 19. It’s still near its all-time high set Thursday, buoyed by expectations that cuts to interest rates are coming this year and by signals that the economy remains remarkably resilient.
The Dow Jones Industrial Average rose 46.97, or 0.1%, to 38,769.66, and the Nasdaq composite fell 65.84 or 0.4%, to 16,019.27.
Tuesday’s report on prices at the consumer level could show inflation remained at 3.1% in February, if economists’ forecasts are correct.
A month ago, a hotter-than-expected report on inflation at the consumer level sent financial markets spinning after scrambling bets for when the Federal Reserve will start cutting rates. Stocks have already run higher and Treasury yields have already eased in the bond market on expectations that such cuts are coming.
But the trend for inflation has been mostly downward, cooling toward the Fed’s 2% target from its peak above 9%. Fed Chair Jerome Powell Jerome Powell said last week the Fed is “not far” from getting enough confidence about inflation to begin cutting rates. Cuts to the Fed’s main interest rate, which is at its highest level since 2001, would relax pressure on the economy and financial system, while goosing investment prices.
The general expectation among traders is that the Fed will begin cutting rates in June.
It’s such expectations that have helped drive the U.S. stock market’s big run since late October, according to Michael Wilson and other strategists at Morgan Stanley. From here, though, “the burden is now likely on earnings/fundamentals to show more material improvement” for the rally to continue.
This most recent earnings reporting season has mostly wrapped up, but Archer Daniels Midland and Ulta Beauty are among the S&P 500 companies reporting later this week.
Expectations for easier interest rates have helped the price of gold rally to a record. When bonds pay less in interest, investors lose out on less income by owning gold instead. Gold for delivery in April ticked up by $3.10 to settle at $2,188.60 per ounce. Gold prices are up about 17% over the last 12 months.
Bitcoin, which proponents sometimes pitch as “digital gold,” also rallied to another record. It rose above $72,000 after sitting below $17,000 at the start of last year. It’s more than bounced back from its prior prior peak of nearly $69,000.
On Wall Street, Oracle rose 1.5% before it released its latest earnings report after trading finished for the day. Its profit topped analysts’ expectations, and its stock rose more in afterhours trading.
On the losing end was natural-gas producer EQT, which sank 7.8% for the biggest drop in the S&P 500. It said it will buy Equitrans Midstream and its gas transmission and storage systems in an all-stock deal that values the combined company at $35 billion. Equitrans Midstream rose 1.5%.
Nvidia swung through a shaky day after coming off a 5.5% drop on Friday, which was its worst day since May. Nvidia is still up more than 70% this year after more than tripling last year amid a frenzy on Wall Street around artificial-intelligence technology.
The rally has caused Nvidia to swell in size, and it’s become the third-largest stock on Wall Street. That gives its stock movements outsized sway on the S&P 500, and it’s been getting criticism that its stock ran too high, too fast. After flipping earlier between losses and gains, Nvidia’s stock dropped 2% to act as one of the heaviest weights on the S&P 500.
Reddit said it may raise up to $748 million through the sale of stock to investors on an exchange for the first time. The social media company expects its stock to trade under the “RDDT” ticker symbol.
In the bond market, yields edged higher. The yield on the 10-year Treasury rose to 4.09% from 4.08% late Friday.
In stock markets abroad, indexes were mostly lower across much of Europe and Asia.
Japan’s Nikkei 225 tumbled 2.2%. The government there said its economy may have actually grown slightly in the last three months of 2023, better than the contraction it had earlier said. That would mean its economy is not in a recession.
The Nikkei 225 has been setting records recently after surpassing its peak from 1989, boosted in part by extremely easy interest rates and other policies meant to support Japan’s economy.
Chinese stocks rose, with indexes climbing 0.7% in Shanghai and 1.4% in Hong Kong. China’s National People’s Congress concluded with a near unanimous show of support for the decisions set by top leaders of the ruling Communist Party.
