NEW YORK (`) — U.S. stocks fell Monday as Wall Street prepares for an inflation report that could show how realistic its hopes for lower interest rates are.
The S&P 500 was down 0.2% in early trading, marking just its third losing week in the last 19 years. But it is still near its all-time high hit on Thursday, buoyed by expectations of interest rate cuts this year and by signals that the economy remains remarkably resilient.
The Dow Jones Industrial Average fell 111 points, or 0.3%, as of 9:40 a.m. Eastern time, and the Nasdaq Composite was 0.1% lower.
The report on consumer prices released on Tuesday could show that inflation remained at 3.1% in February if economists' forecasts are correct.
A month ago, a hotter-than-expected consumer inflation report roiled financial markets as bets on when the Federal Reserve might begin cutting interest rates were thrown into disarray. Stocks have already risen and Treasury yields have already fallen in the bond market on expectations that such cuts are imminent.
However, the inflation trend was largely down, cooling from its peak above 9% toward the Fed's 2% target. Fed Chairman Jerome Powell Jerome Powell said last week that the Fed is “not far away” from gaining enough confidence in inflation to begin cutting interest rates. The Fed has already raised its key interest rate to its highest level since 2001 to curb inflation, and cuts would ease pressure on the economy and financial system while boosting investment prices.
The widespread expectation among traders is that the Fed will begin cutting interest rates in June.
Expectations of lower interest rates have helped push gold prices to record highs. If bonds pay less interest, investors miss out on less income by owning gold instead. Gold prices were roughly unchanged on Monday at $2,184.60 an ounce.
Bitcoin, sometimes referred to as “digital gold” by proponents, also rallied to a new record. It rose above $72,268 before falling back to around $72,000. At the start of last year, it was below $17,000, having crashed from a previous high of nearly $69,000.
A number of new exchange-traded funds that make investing in Bitcoin easier have also helped increase interest in the cryptocurrency. Coinbase, which provides custodial services for these ETFs and allows traders to buy and sell on their own, rose 3.6%.
On the losing side was Nvidia, which fell 0.5%. It is on an unusual losing streak, falling 5.5% on Friday, its worst day since May. Nvidia is still up more than 70% this year after more than tripling last year amid excitement over artificial intelligence technology on Wall Street.
The rally has seen Nvidia grow in size, becoming the third-largest stock on Wall Street. As a result, the company's stock movements have an outsized influence on the S&P 500.
Elsewhere on Wall Street, Reddit said it plans to raise nearly $750 million by selling its shares to investors on a stock exchange for the first time. The social media company expects its shares to trade under the ticker symbol “RDDT.”
Yields on the bond market remained relatively stable. The yield on the 10-year Treasury note was at 4.08% late Friday.
On stock markets abroad, indices were mostly lower in large parts of Europe and Asia.
Japan's Nikkei 225 fell 2.2%. The government there said its economy may actually have grown slightly in the final three months of 2023, better than the predicted decline. This would mean that the country's economy is not in recession.
The Nikkei 225 has been setting records recently after surpassing its 1989 peak, thanks in part to ultra-loose interest rates and other measures to support the Japanese economy.
Chinese stocks rose, with indexes rising 0.7% in Shanghai and 1.4% in Hong Kong. China's National People's Congress ended with almost unanimous support for the decisions of the ruling Communist Party's top leaders.
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` business reporters Matt Ott and Elaine Kurtenbach contributed.
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