Wall Street barely budges as S&P 500 remains just shy of its record

NEW YORK —  U.S. stock indexes drifted to a mixed finish Monday, hanging near their record heights.

The Standard & Poor’s 500 index edged down by 1.26 points, or less than 0.1%, to 5,221.42 after flipping between small gains and losses through the day. It remains within 0.6% of its record set at the end of March.

The Dow Jones industrial average slipped 81.33 points, or 0.2%, to 39,431.51, and the Nasdaq composite rose 47.37 points, or 0.3%, to 16,338.24.

Biopharmaceutical company Incyte jumped 8.6% after saying it would buy back up to $2 billion of its stock. It’s the latest big company to say it’s returning cash to shareholders through such purchases, which boost the amount of earnings that each remaining share is entitled to.

GameStop soared 74.4% in a swing reminiscent of its maniacal moves from three years ago, when hordes of smaller-pocketed investors sent the stock’s price way above what many professional investors considered rational.

One believer in particular, nicknamed Roaring Kitty, helped lead that charge, and a post on a social media account linked to him stirred more adrenaline. Within the first 70 minutes of trading Monday, trading of GameStop’s stock was temporarily halted nine times because its price was swinging so sharply.

On the losing end was Fortrea Holdings, a provider of clinical trial management and other services for the life sciences industry. It fell 14.9% after reporting weaker results for the first three months of the year than analysts expected. It also gave a forecast for revenue over the full year that was below analysts’ expectations.

Stocks have broadly rallied this month after a rough April on revived hopes that inflation may ease enough to convince the Federal Reserve to cut its main interest rate later this year. A key test for those hopes will arrive Wednesday, when the U.S. government offers the latest monthly update on inflation that households are feeling across the country.

Other reports this week include updates on inflation that wholesalers are seeing and sales at U.S. retailers. They could show whether fears are warranted about a worst-case scenario for the country, where stubbornly high inflation forms a devastating combination with a stagnating economy.

Hopes have climbed that the economy can avoid what’s called “stagflation” and hit the bull’s eye where it cools enough to get inflation under control but stays sturdy enough to avoid a bad recession. Fed Chair Jerome H. Powell also gave financial markets comfort when he recently said the Fed remains closer to cutting rates than to raising them, even if inflation has remained hotter than forecast this year.

Some critics say the Fed may have to delay rate cuts for longer than traders expect because of continued pressure on inflation. The goal for inflation that “the Fed seeks is a pipe dream,” said Barry Bannister, a managing director at Stifel.

He says all the downward pressure on inflation that an economy usually gets from a recession has already been wrung out after the U.S. economic slowdown from 2022 into 2023, and he expects the next big move of 500 points for the S&P 500 to be downward.

In the meantime, a stream of stronger-than-expected reports on U.S. corporate profits has helped support the market. Companies in the S&P 500 are on track to report growth of 5.4% for their earnings per share in the first three months of the year versus a year earlier, according to FactSet. That would be the best growth in nearly two years.

Earnings season has nearly finished, and reports are in for more than 90% of companies in the S&P 500. But this week includes Walmart and several other big names. They could offer more detail about how U.S. households are faring.

Worries have been rising about cracks showing in spending by U.S. consumers, which has been one of the bedrocks keeping the economy out of a recession. Lower-income households appear to be under particularly heavy strain amid still-high inflation.

In the bond market, Treasury yields eased a bit. The yield on the 10-year Treasury slipped to 4.48% from 4.50% late Friday.

In stock markets abroad, Chinese indexes were mixed. The Biden administration is expected to announce this week that it will raise tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China, according to people familiar with the plan. Tariffs on electric vehicles, in particular, could quadruple to 100%.

Indexes slipped 0.2% in Shanghai and rose 0.8% in Hong Kong. Elsewhere in Asia and in Europe, most were modestly lower.

Choe writes for the Associated Press