Wall Street’s major stock indexes gave up early gains, ending a choppy trading day on Monday.
The S&P 500 and Nasdaq each fell 0.1% after shedding gains of 1% and 1.6%, respectively. The Dow Jones Industrial Average closed 0.1% higher.
Small company stocks outperformed the broader market, suggesting investors are bullish on the economy. The Russell 2000 was up 1%.
The market’s recent swings came as investors braced for a busy week of economic updates that could help answer whether the Federal Reserve’s efforts to cool the economy and quell inflation are working or whether the central bank will continue to aggressively interest rates will raise. Wall Street fears the Fed will hit the brakes too hard and trigger a recession.
“Early signs of inflationary pressures appear to be abating, which will be an important catalyst for the market,” said Quincy Krosby, LPL Financial’s chief global strategist.
The S&P 500 fell 5.13 points to 4,140.06, while the Nasdaq slipped 13.10 points to 12,644.46. The Dow added 29.07 points to close at 32,832.54. The Russell 2000 rose 19.38 points to 1,941.21.
The benchmark S&P 500 index posted three weekly gains in a row. Investors remain focused on inflation and its impact on businesses and consumers, as well as the Federal Reserve’s efforts to combat higher prices. The central bank has aggressively raised interest rates in an attempt to slow economic growth and curb record-high inflation. The Fed is expected to hike short-term rates by another 0.75 percentage point at its next meeting.
The Federal Reserve Bank of New York on Monday released a July Consumer Sentiment Survey showing there was a “substantial drop” in inflation expectations for everything from groceries and gasoline to house prices.
The Labor Department is due to release its July consumer price report on Wednesday, followed by its wholesale-level price report on Thursday.
This week’s inflation updates follow last week’s reports showing that the jobs market remains strong. While that’s good for the economy, it has complicated the job of the Fed, which may be forced to proceed with aggressive rate hikes to cool the economy and rising inflation.
Investors are still reviewing the latest round of corporate earnings, which could also provide more detail on how hard inflation is hitting consumers and businesses. Nvidia fell 6.3% for one of the biggest declines in the S&P 500 after warning investors that its second-quarter revenue would fall short of forecasts due to weaker gaming earnings.
Generic-drug maker Viatris rose 3.7% after beating Wall Street’s second-quarter earnings and sales forecasts.
Technology stocks were the biggest drag on the market on Monday, outweighing modest gains in other sectors. Expensive stocks in the sector tend to push the market up or down with more weight. Microsoft fell 0.9%.
Retailers and communications stocks were among the biggest gainers. Best Buy rose 2.8% and Facebook’s parent company, Meta Platforms, rose 1.9%.
Clean energy companies have gained ground after Senate approval for the Democrats’ big election-year economic package that includes funds to fight climate change. First Solar rose 4.7%.
Bond yields fell. The 10-year Treasury yield, which drives interest rates on mortgages and other consumer credit, slipped to 2.76% from 2.83% late Friday.
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