US stocks are trending Monday, beginning what may be a quiet period after the best week since March.
The Standard & Poor’s 500 was little changed in morning trade. The Dow Jones industrial moving average was down 81 points, or 0.2%, to 33,681 as of 10:30 a.m. Eastern time, while the Nasdaq composite was up 0.1%.
Indices were listless after a report showed companies in the lodging, construction and other US services sectors grew for a fifth straight month in May, albeit less than economists had expected. These are the latest mixed numbers on the US economy, which is beginning to slow under the weight of higher interest rates but has so far defied forecasts of a recession.
In the S&P 500, more stocks fell than they rose, but a surge in market heavyweight Apple helped stabilize Wall Street. It rose 1.5% ahead of an event expected to unveil a long-rumored headset designed to move its users between the virtual and real worlds.
In the oil market, crude rose after Saudi Arabia said it would cut production in hopes of raising the price. A barrel of US crude rose 1.2% to $72.62 and a barrel of Brent crude, the international standard, rose 0.6% to $76.60.
Both were close to $120 a year ago, and their prices have fallen on concerns that a struggling global economy would use less fuel.
Otherwise, Wall Street was relatively quiet. The coming week will be marked by earnings reports and top-notch economic data. That leaves little clue to the dominant question plaguing the market: Which comes first: the economy slips into recession or inflation eases enough for the Federal Reserve to cut interest rates?
Therefore, close attention is on next week when the government will release the latest monthly updates on consumer and wholesale inflation. It is also when the Fed next meets on interest rate policy. Traders are largely betting on rates staying flat, which would be the first meeting where they haven’t been raised in more than a year.
However, Wall Street believes it could start raising rates again in July. The reason for such a pause would be to give the Fed time to assess its rapid pace of rate hikes over the past year.
The goal of high interest rates is to lower inflation by slowing down the overall economy and lowering the prices of stocks, bonds, and other assets. With interest rates hitting their highest levels since 2007, a series of high profile US bank failures since March have rocked the market, while manufacturing has been contracting for months.
Nevertheless, the labor market has managed to remain remarkably stable despite these measures. That has helped US households keep spending, which has kept the economy out of a recession. Last week, data showed that US employers unexpectedly accelerated hiring in May, while workers’ wage increases slowed to ease inflationary pressures.
Despite all the economic uncertainty, Wall Street remains on the edge of a so-called bull market after weeks of growth.
The S&P 500 is just below 4,284 and if it finishes the day above 4,292.44 it will be more than 20% up from mid-October. That would mean that Wall Street’s main health indicator has turned from its cold “bear market” when it fell more than 20% in nine months into a powerful bull market.
In the bond market, the 10-year Treasury yield fell to 3.67% from 3.70% late Friday.
The two-year Treasury bond, which is better in line with Fed expectations, fell to 4.47% from 4.51%. The reading was higher earlier in the morning before a weaker-than-expected report on the US services industry.
On the stock markets abroad, the indices in Europe were mostly lower. Japan’s Nikkei 225 rose 2.2%, while gains in other Asian markets were more modest.
` writers Matt Ott and Joe McDonald contributed to this report.
Comments are closed.