NEW YORK (AP) — U.S. stock indexes ended mixed Monday, hovering near record highs.
The S&P 500 fell $1.26, or less than 0.1%, to 5,221.42, after making small gains and losses throughout the day. This remains within 0.6% of the record set at the end of March.
The Dow Jones Industrial Average fell 81.33 points, or 0.2%, to $39,431.51, and the Nasdaq Composite Index rose 47.37 points, or 0.3%, to $16,338.24.
Biopharmaceutical company Insight rose 8.6% after announcing a stock buyback of up to $2 billion. The company recently announced that it would return cash to shareholders and increase residual earnings per share through such acquisitions.
GameStop soared 74.4% in a swing reminiscent of its crazy run three years ago. At the time, many small investors priced the stock far above what many professional investors would consider reasonable.
One believer in particular, nicknamed Roaring Kitty, led the charges, and posts on social media accounts linked to him added to the adrenaline rush. Within the first 70 minutes of trading on Monday, the price of GameStop stock was so volatile that trading in the stock was suspended nine times.
The loser was Fortrea Holdings, which provides clinical trial management and other services to the life sciences industry. Shares fell 14.9% after it was announced that financial results for the first three months of this year were weaker than analysts expected. The company also announced full-year sales forecasts that were lower than analysts expected.
After a rough April, stocks were mostly higher this month as hopes were reignited that inflation would ease enough to convince the Fed to cut key interest rates by the end of the year. A key test of those expectations will come Wednesday, when the U.S. government releases its latest monthly update on inflation felt by households across the country.
Other reports this week include updates on inflation seen by wholesalers and sales for U.S. retailers. These could show whether fears about the worst-case scenario for the country, in which persistently high inflation forms a devastating combination with economic stagnation, are justified.
There are growing hopes that the economy can avoid so-called “stagflation” and remain strong enough to avoid a bad recession while cooling enough to keep inflation in check. Federal Reserve Chairman Jerome Powell recently said that the Fed is still closer to cutting rates than raising them, even though inflation has remained higher than expected so far this year. It reassured the market.
Some critics say the Fed may have to hold off on cutting rates for a longer period of time than traders expected because of continued inflationary pressures. “The Fed’s inflation target is a pipe dream,” said Barry Bannister, a managing director at Stifel.
He expects the S&P 500’s next big move of 500 points to be a decline, as the downward pressure on inflation that a recession typically puts on an economy has already been lifted as the U.S. economy slows in 2022-2023. are doing.
Meanwhile, a series of better-than-expected reports on U.S. corporate profits supported markets. S&P 500 companies are on track to report a 5.4% increase in earnings per share for the first three months of this year from a year ago, according to FactSet. This is the highest growth in about two years.
Earnings season is almost over, with more than 90% of S&P 500 companies having reported their results. But next week will also include Walmart and several other big companies. They may provide more detailed information about how American households are faring.
There are growing concerns that cracks are appearing in U.S. consumer spending, one of the foundations protecting the economy from recession. With inflation still high, low-income households appear to be under particular strain.
In the bond market, US Treasury yields fell slightly. The yield on the 10-year U.S. Treasury note fell to 4.48% from 4.50% late Friday.
In overseas stock markets, Chinese indexes were mixed. The Biden administration is expected to announce this week that it will increase tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China, according to people familiar with the plans. In particular, tariffs on electric vehicles could increase by four times to 100%.
In Shanghai, the index fell 0.2%, while in Hong Kong it rose 0.8%. Most regions were slightly lower in other parts of Asia and Europe.
