NEW YORK (AP) – U.S. stocks were hovering around record highs Thursday on mixed economic data.
The S&P 500 was down 0.2% in midday trading after swinging between early gains and losses. As of 11:10 a.m. ET, the Dow Jones Industrial Average was down 68 points, or 0.2%, and the Nasdaq Composite was nearly flat.
Reports that wholesale inflation last month was slightly higher than economists expected led bond markets to become more judgmental and push up U.S. Treasury yields. This is the latest in a series of indicators of worse-than-expected inflation, leaving previous expectations that the U.S. Federal Reserve could start cutting interest rates this month closed. .
However, other reports released in the morning showed the economy was softening slightly, sustaining hopes for a continued long-term downward trend in inflation.
Traders still largely expect the Fed to start cutting interest rates in June, according to CME Group data. The Fed’s key interest rate is at its highest level since 2001 in hopes of curbing inflation, and a rate cut would ease pressure on the economy and financial system.
The question hanging over Wall Street is whether the latest signs of potentially stubborn inflation ultimately mean further delays in rate cut expectations. That could damage the strong rally in U.S. stocks, which have risen in 16 of the past 19 weeks since late October.
Traders pushed back some of their bets on the first rate cut in June-July.
“So far, the market has ignored concerns about stubborn inflation and a cautious Fed,” said Chris Larkin, managing director of trading and investments at Morgan Stanley’s E-Trade.
But Brian Jacobsen, chief economist at Annex Wealth Management, said mixed indicators suggest the Federal Reserve will cut interest rates only two times this year, down from three. there is a possibility.
Fed officials are expected to release their latest forecast for where interest rates will go this year and beyond on Wednesday after their latest policy meeting.
The data they will consider includes a report on Thursday that said shoppers spent less money at U.S. retailers last month than economists expected. While such data will weigh on the broader economy, it could also take some upward pressure off inflation.
The government also announced that retail sales in January were weaker than originally expected. In the past, strong spending by American households was one of the keys to keeping the economy from recession despite high interest rates.
Fewer U.S. workers than expected applied for unemployment benefits last week, according to a separate report. This is good news for workers in general. But if the job market, which has remained remarkably resilient, becomes too strong, upward pressure on inflation could increase.
The yield on the 10-year U.S. Treasury rose to 4.28% from 4.19% late Wednesday on mixed data. The yield on the two-year Treasury note, which more accurately reflects expectations for the Fed, rose to 4.68% from 4.63%.
On Wall Street, Dollar General soared even though it reported better-than-expected profits and sales in its latest quarter. The company’s shares fell 4.6% after rising more than 6% in the morning.
Dollar General executives said inflation is causing customers to move away from non-essential items and name brands and make trade-offs in the aisles. The company also plans to eliminate self-checkout systems from more than 300 stores that are experiencing significant inventory losses.
Shares plunged a day earlier after rival Dollar Tree reported weaker-than-expected financial results and announced it would close hundreds of Family Dollar stores.
Dick’s Sporting Goods rose 13.4% after the company reported better-than-expected profits for its latest quarter and announced a dividend increase.
Robinhood Markets rose 6.8% last month as stock and cryptocurrency prices neared record highs and customer trading activity increased significantly.
U.S. Steel fell 2.2% after President Joe Biden expressed opposition to the company’s planned sale to Nippon Steel.
In December, Nippon Steel announced plans to buy the Pittsburgh-based steelmaker for $14.1 billion in cash, raising questions about how the deal would affect unionized workers, the supply chain and U.S. national security. There are growing concerns about the impact it will have.
U.S.-traded Anheuser-Busch InBev shares fell 5.4% after Altria announced it would sell some of its stake in the Budweiser maker. Altria will sell 35 million of its 197 million ABI shares.
Homebuilder Lennar fell 4.9% as sales fell short of analysts’ expectations despite reporting better-than-expected profit growth.
In overseas stock markets, indexes were mixed in Europe and Asia.
Japan’s Nikkei stock average rose 0.3% as speculation mounted that the Bank of Japan would soon end its policy of keeping interest rates below zero.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
Stan Cho, Associated Press
