NEW YORK (`) — U.S. stocks hovered around records Thursday after mixed economic data.
The S&P 500 fell 0.2% in midday trading after swinging between earlier gains and losses. The Dow Jones Industrial Average fell 68 points, or 0.2%, as of 11:10 a.m. Eastern time, and the Nasdaq Composite was virtually unchanged.
The bond market was more determined and Treasury yields rose after a report showed inflation was only modest hotter at the wholesale level last month than economists expected. It's the latest in one data sequence At inflation that was nice worse than predictedwhich has kept the door closed to previous hopes that the Federal Reserve could start cutting interest rates this month.
However, other reports released in the morning showed some weakening in the economy, maintaining hopes that the long-term inflation trend remains declining.
Traders still largely expect the Fed to begin cutting interest rates in June, according to data from CME Group. The Fed's interest rate is at its highest level since 2001 in hopes of curbing inflation, and cuts would ease pressure on the economy and financial system.
The question on Wall Street is whether recent signals of potentially stubborn inflation will ultimately lead to further delays in rate cut forecasts. This, in turn, could dent the huge rise in US stocks since the end of October, which have risen in 16 of the last 19 weeks.
Traders placed a small portion of their bets on the first rate cut from June into July.
“So far the market has shrugged off concerns about stubborn inflation and a cautious Fed,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
However, according to Brian Jacobsen, chief economist at Annex Wealth Management, the mix of data could prompt the Federal Reserve to signal that it plans to cut interest rates only two times this year, rather than three.
Fed officials will provide their latest forecasts for where interest rates will head this year and in the coming years on Wednesday, following their final policy meeting.
Among the data they will consider is a report from Thursday that said Shoppers spent less at U.S. retailers last month than economists expected. Such data weighs on the overall economy, but could also remove some upward pressure on inflation.
The government also said retail sales in January were weaker than initially estimated. High spending by US households, despite high interest rates, used to be one of the cornerstones of keeping the economy out of a recession.
A separate report found fewer U.S. workers have applied Unemployment benefits last week than expected. This is good news for workers in general. But too much strength in the labor market, which remains remarkably resilient, could add upward pressure on inflation.
The mix of data pushed the yield on the 10-year Treasury note up to 4.28% from 4.19% late Wednesday. The two-year yield, which is more in line with Fed expectations, rose to 4.68% from 4.63%.
On Wall Street, Dollar General fluctuated wildly despite reporting higher-than-expected profits and revenue for its latest quarter. The stock fell 4.6% after rising more than 6% early in the morning.
Dollar General executives said inflation is forcing customers to compromise in the aisles and stay away from nonessential items and big-name brands. In addition, the self-checkout system will be eliminated from more than 300 stores where high levels of inventory are lost.
A day earlier, rival Dollar Tree slumped after reporting weaker-than-expected results and saying it would close hundreds of its Family Dollar stores.
Dick's Sporting Goods rose 13.4% after the company reported higher-than-expected profit for its latest quarter and raised its dividend.
Robinhood Markets rose 6.8% as stock and crypto prices near record levels led to strong growth in its customers' trading activity last month.
US Steel fell 2.2% as president Joe Biden comes out on the other hand the planned sale of the company to Nippon Steel from Japan.
Nippon Steel announced in December that it would buy the Pittsburgh-based steelmaker for $14.1 billion in cash, raising concerns about the deal's impact on unionized workers, supply chains and U.S. national security.
U.S.-traded shares of Anheuser-Busch InBev fell 5.4% after Altria said it would sell part of its stake in the maker of Budweiser. Altria is offering 35 million of its 197 million ABI shares.
Homebuilder Lennar fell 4.9% despite reporting stronger-than-expected profit growth as its revenue fell short of analysts' forecasts.
On overseas stock markets, indices in Europe and Asia were mixed.
Japan's Nikkei 225 rose 0.3% as speculation grew that the Bank of Japan could soon end its policy of keeping interest rates below zero.
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` business reporters Yuri Kageyama and Matt Ott contributed.
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