Stock Market Today: Wall Street Stable Ahead of This Week’s Fed Meeting

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NEW YORK (AP) — U.S. stocks were mixed in quiet trading Monday ahead of the release of a key measure of inflation and the Federal Reserve’s latest interest rate meeting.

The S&P 500 was down 0.1% in morning trading but still near last week’s record high. The Dow Jones Industrial Average was up 7 points, or less than 0.1%, as of 10:20 a.m. Eastern time, and the Nasdaq Composite was down 0.2%.

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Huntington Bancshares Inc. was the market’s biggest loser, dropping 5.9%, after the company cut its forecast for a key component of its profit this year, followed by other banks dropping, including Citizens Financial Group Inc., down 3.1%, Regions Financial Inc., down 3% and KeyCorp Inc., down 2.7%.

Diamond Offshore Drilling Inc. rose 10.4% after Noble agreed to buy its rival in a deal worth about $1.6 billion in cash and stock. Noble rose 4.7%, indicating traders expect the merger between the two companies to be successful.

Apple shares fell 0.9% ahead of a conference where analysts expect the company to detail its work on artificial intelligence technology. Widespread Wall Street furor over AI has helped propel shares to record highs despite concerns about high interest rates and the resulting slowdown in the U.S. economy.

Recent mixed economic data has traders hoping to finally see a decent slowdown, which could ease upward pressure on inflation and prompt the Federal Reserve to cut its key interest rate from its tightest level in more than two decades.

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But Friday’s better-than-expected jobs report was followed closely by weaker-than-expected data on U.S. manufacturing and other sectors of the economy, making the data difficult to interpret. Even in the heart of the U.S. economy, U.S. consumer spending, there is still a wide gap between lower-income households, which are struggling to keep up with high inflation, and higher-income households, which are doing much better.

“Ultimately, data remains mixed and key macroeconomic outcomes this year remain uncertain,” Morgan Stanley strategists led by Michael Wilson said.

Meanwhile, companies benefiting from the AI ​​boom continue to report strong growth, largely unrelated to the economy and interest rates. Nvidia, for example, still has a market capitalization of nearly $3 trillion after dropping 1.7% on Monday. It was the company’s first day of trading after its shares soared to more than $1,000 amid the AI ​​boom, and it implemented a 1-for-10 stock split to make it more affordable to more investors.

Treasury yields were mixed in the bond market ahead of releases later in the week that will show whether inflation improved last month at both the consumer and wholesale levels.

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A report is due out this weekend showing how much inflation U.S. households are bracing for in the future. The Federal Reserve is closely watching the measure, hoping to avoid a vicious cycle in which expectations of higher inflation lead to actions that exacerbate even greater inflation.

On Wednesday, the Federal Reserve will announce its latest decision on interest rates. Few expect the key rate to move at that point, but policymakers will likely release their latest forecasts for where rates and the economy are headed in the future.

Fed officials last made such a forecast in March, when they suggested central bank members still expected about three rate cuts in 2024. That forecast will almost certainly be lower this time: Wall Street traders are roughly betting on one or two rate cuts in 2024, according to data from CME Group.

In the bond market, the yield on the 10-year Treasury note rose to 4.45% from Friday’s close of 4.43%. The yield on the two-year note, which is more in line with the Fed’s expectations, fell to 4.87% from 4.89%.

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On the international stock market, the French CAC 40 index fell 1.9% after French President Emmanuel Macron dissolved the National Assembly following the unexpected results of the European Parliament elections, leading to a big surge for far-right parties and a drop in the value of the euro. Other European indexes also fell, but not as much as the French.

Asian markets ended mixed. Tokyo’s Nikkei rose 0.9% after government data showed Japan’s economy contracted less than initially expected in the first three months of the year. South Korea’s KOSPI fell 0.8%, while markets in Shanghai, Hong Kong and Australia were closed for public holidays.

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AP writers Matt Ott and Jimmo Zhong contributed.

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