Stock market today: Wall Street is virtually at a standstill after last week's sharp price fluctuations | National News

NEW YORK (`) — U.S. stock indexes remained virtually silent Monday as trading calmed after falling slightly short of their records following a turbulent few days.

The S&P 500 fell 1.95 points, or less than 0.1%, to 5,202.39. It was just coming off a shaky period in which a 1.2% decline immediately turned into a 1.1% rise.

The Dow Jones Industrial Average fell 11.24 points, or less than 0.1%, to 38,892.80, while the Nasdaq Composite rose 5.44 points, or less than 0.1%, to 16,253.96.

Much of the focus has been on interest rates and when the Federal Reserve will lower them to ease pressure on the economy and financial system. A series of reports showing inflation and the economy have remained hotter than expected have forced Wall Street to shift its forecasts for the timing of a rate cut.

There are several trouble spots in the coming week that could drive expectations further higher. The latest monthly update on inflation being felt by US consumers will be released on Wednesday. Reports on wholesale inflation and expectations for upcoming US household inflation will be released later in the week.

Federal Reserve Chair Jerome Powell recently said he still expects interest rate cuts this year, but the central bank needs additional confirmation that inflation is moving toward its 2% target. The Fed is keeping its key interest rate at its highest level since 2001, hoping to put enough pressure on the economy and prices that investment will bring inflation under control. The risk of keeping interest rates too high for too long is that it could lead to a recession.

Some Fed officials have raised the possibility that interest rates will stay higher for longer if inflation remains stubborn. That has led many traders on Wall Street to lower their expectations for the number of rate cuts this year from three to two. They had already drastically downgraded their forecasts earlier this year, when many were expecting six or more cuts.

Traders now see about an equal chance of the Fed cutting interest rates at its June meeting, according to data from CME Group. A month ago the probability was over 70%.

Interest rate cuts not only make it easier for U.S. households and businesses to borrow, but they also encourage investors to pay higher prices for stocks and other investments. Due to these expectations, share prices have already risen sharply in some cases.

U.S. stocks remained near records even as expectations for interest rate cuts this year faded on hopes the strong economy will boost corporate profits. Profits and interest rates are the two main levers that determine stock prices.

Such hopes have helped the stock market's gains expand beyond the handful of Big Tech stocks that accounted for the bulk of last year's gain. Energy producers in the S&P 500 are up 16% this year after falling nearly 5% last year on expectations that a recent rebound in energy prices will mean higher profits going forward.

It is also possible that the U.S. economy could experience strong growth while inflation cools. That's what Goldman Sachs economist David Mericle predicts, due in part to increasing immigration of younger people to work in construction and other industries that generally earn lower wages.

Friday's surprisingly strong jobs report showed that average hourly wages for workers performed as expected, even though employers hired far more workers than expected last month.

But critics say share prices already look expensive given their huge rise of more than 20% from November to March. That means “achieving ambitious earnings forecasts has become paramount,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

“Economic growth is good, but complacency with its impact is not,” she said.

To that end, this week will mark the start of the latest earnings reporting season. Delta Air Lines, JPMorgan Chase and other banks will headline the early days of the period. Analysts expect companies across the S&P 500 to post their third consecutive quarter of growth.

Real estate investment trusts added to market leadership after Apartment Income REIT said Blackstone had agreed to buy the company for about $10 billion in cash, including assumed debt. Apartment Income REIT, also operated by AIR Communities, rose 22.4%.

On the losing side of Wall Street was Trump Media & Technology Group. The stock price of the company behind the platform Truth Social has fluctuated wildly from day to day as experts say it depends more on the hopes of Trump fans than the company's profit prospects. It fell by 8.4%.

In the bond market, Treasury yields rose, adding to their year-to-date gains as interest rate cut expectations faded. The yield on the 10-year Treasury note rose to 4.42% from 4.40% late Friday and from less than 3.90% earlier in the year.

On overseas stock markets, indices rose, particularly in Europe and Asia, although shares in Shanghai fell 0.7%.

` business reporters Matt Ott, Yuri Kageyama and Alex Veiga contributed.

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