Stocks at standstill near all-time highs
NEW YORK — U.S. stock indexes held at a virtual standstill Monday as trading calmed after a whirlwind couple of days left them a bit shy of their records. The S&P 500 edged down by 1.95 points, or less than 0.1%, to 5,202.39. It was coming off a shaky stretch where a 1.2% drop immediately flipped to a 1.1% gain.
The Dow Jones Industrial Average tiptoed 11.24 points lower, or less than 0.1%, to 38,892.80, while the Nasdaq composite inched 5.44 points higher, or less than 0.1%, to 16,253.96.
Much of the focus has been on interest rates and when the Federal Reserve will lower them to ease pressure on the economy and financial system. A string of reports showing inflation and the economy have remained hotter than expected has forced Wall Street to delay forecasts for when relief on rates could arrive.
This upcoming week has several flashpoints that could further swing expectations. On Wednesday will come the latest monthly update on the inflation that U.S. consumers are feeling. Later in the week will be reports on inflation at the wholesale level and expectations for upcoming inflation among U.S. households.
Fed Chair Jerome Powell said recently he still expects cuts to interest rates this year, but the central bank needs additional confirmation inflation is heading toward its target of 2%. The Fed has been holding its main interest rate at the highest level since 2001, hoping to grind down enough on the economy and prices for investments to get inflation under control. The risk of holding rates too high for too long is that it could cause a recession.
Critics say stock prices already look expensive given their huge run of more than 20% from November into March. That means “achieving ambitious earnings forecasts has become paramount,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
“Economic growth is good, but complacency around its implications is not,” she said.
To that end, this week will bring the start of the latest earnings reporting season. Delta Air Lines, Jpmorgan Chase and other banks will headline the earliest days of the reporting period. Analysts are expecting companies across the S&P 500 to deliver a third straight quarter of growth.
Real-estate investment trusts helped lead the market after Apartment Income REIT said Blackstone agreed to buy it for about $10 billion in cash, including assumed debt. Apartment Income REIT, which also goes by AIR Communities, jumped 22.4%.
In the bond market, Treasury yields rose to add to their gains for the year so far on diminished expectations for cuts to rates. The yield on the 10-year Treasury ticked up to 4.42% from 4.40% late Friday and from less than 3.90% at the start of the year.