NEW YORK (AP) — U.S. stocks are edging lower Monday ahead of a week with several top-tier reports on inflation due, as well as the Federal Reserve’s latest meeting on interest rates.
The S&P 500 was 0.2% lower in early trading, still close to its record set last week. The Dow Jones Industrial Average was down 74 points, or 0.2%, as of 9:37 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.
Huntington Bancshares dropped 4.5% to one of the market’s larger losses after it cut its forecast for a key component of profit this year.
Diamond Offshore Drilling jumped 8.5% after Noble agreed to buy its rival in a cash-and-stock deal valued at roughly $1.6 billion. Noble added 1.5% in a signal that traders expect the combination to be a winner.
Apple was drifting 0.3% lower ahead of a conference where analysts expect it to offer details about its moves into artificial-intelligence technology. A furor around AI broadly on Wall Street has helped send stocks to records despite worries about high interest rates and the slowdown in the U.S. economy that they induce.
Data on the economy have come in mixed recently, and traders are hoping they will ultimately show a slowdown that’s just right in magnitude. A cooldown would put less upward pressure on inflation, which could encourage the Federal Reserve to cut its main interest rate from its most punishing level in more than two decades. And if the Federal Reserve can manage to ease rates at the right time by the right amount, it could nudge the slowing economy forward again before it falls into a recession.
That’s a lot of ifs, but Wall Street is hopeful. In the meantime, companies benefiting from the AI boom are continuing to report big growth almost regardless of what the economy and interest rates are doing. Nvidia, for example, is still worth nearly $3 trillion after dipping 0.1% Monday morning.
Treasury yields in the bond market were mixed ahead of reports later in the week that will show whether inflation improved last month at both the consumer and wholesale levels.
At the end of the week will come a report showing how much inflation U.S. households are girding for in the future. The Federal Reserve closely watches the measure, hoping to avoid a vicious cycle where expectations for high inflation lead to behavior that causes even worse inflation.
On Wednesday, the Federal Reserve will announce its latest decision on interest rates. Virtually no one expects it to move its main interest rate then. But policy makers will be publishing their latest forecasts for where they see interest rates and the economy heading in the future.
The last time Fed officials published such projections, in March, they indicated the typical member still expected roughly three cuts to interest rates in 2024. That projection will almost certainly fall this time around. Traders on Wall Street are largely betting on just one or two cuts to rates in 2024, according to data from CME Group.
In the bond market, the yield on the 10-year Treasury rose to 4.45% from 4.43% late Friday. The two-year yield, which more closely tracks expectations for the Fed, slipped to 4.88% from 4.89%.
In stock markets abroad, France’s CAC 40 index sank 1.9% after French President Emmanuel Macron dissolved the National Assembly following surprise results in elections for the European Parliament.
Far-right parties made major gains, and the value of the euro dropped. Other indexes in Europe also fell, though not by as much as France’s.
Markets in Asia ended mixed. Tokyo's Nikkei 225 index rose 0.9% after government data showed Japan’s economy contracted by less in the year’s first three months than earlier thought. South Korea’s Kospi slipped 0.8%, while markets were closed in Shanghai, Hong Kong and Australia for holidays.
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AP Writers Matt Ott and Zimo Zhong contributed.
