Stocks steady ahead of inflation report

Experts forecast little change amid hopes of interest rate cut

NEW YORK — 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 percent, 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 percent, to 38,769.66, and the Nasdaq composite fell 65.84 or 0.4 percent, to 16,019.27.

Tuesday’s report on prices at the consumer level could show inflation remained at 3.1 percent 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 percent target from its peak above 9 percent. 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.

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 percent over the last 12 months.

In the bond market, yields edged higher. The yield on the 10-year Treasury rose to 4.09 percent from 4.08.