People walk past the New York Stock Exchange on March. 21, 2024. World stocks are mixed on Monday, May 13, 2024, after Wall Street coasted to the close of another winning week. U.S. futures and oil prices were higher. (AP Photo/Yuki Iwamura, File)
NEW YORK — U.S. stock indexes drifted to a mixed finish Monday, hanging near their record heights.
The S&P 500 edged down by 1.26, or less than 0.1 percent, to 5,221.42 after flipping between small gains and losses throughout the day. It remains within 0.6 percent of its record set at the end of March.
The Dow Jones Industrial Average slipped 81.33 points, or 0.2 percent, to 39,431.51, and the Nasdaq composite rose 47.37, or 0.3 percent, to 16,338.24.
Biopharmaceutical company Incyte jumped 8.6 percent after saying it would buy back up to $2 billion of its stock. It’s the latest big company to say it’s returning cash to shareholders through such purchases, which boost the amount of earnings that each remaining share is entitled to.
GameStop soared 74.4 percent in a swing reminiscent of its maniacal moves from three years ago when hordes of smaller-pocketed investors sent the stock’s price way above what many professional investors considered rational.
READ: GameStop and AMC surge like it’s 2021
One believer, in particular, nicknamed Roaring Kitty, helped lead that charge, and a post on a social media account linked to him stirred more adrenaline. Within the first 70 minutes of trading on Monday, the trading of GameStop’s stock was temporarily halted nine times because its price was swinging so sharply.
Avoiding stagflation
On the losing end was Fortrea Holdings, a provider of clinical trial management and other services for the life sciences industry. It fell 14.9 percent after reporting weaker results for the first three months of the year than analysts expected. It also gave a forecast for revenue over the full year that was below analysts’ expectations.
Stocks have broadly rallied this month following a rough April on revived hopes that inflation may ease enough to convince the Federal Reserve to cut its main interest rate later this year.
A key test for those hopes will arrive Wednesday, when the U.S. government offers the latest monthly update on inflation that households are feeling across the country.
Other reports this week include updates on inflation that wholesalers are seeing and sales at U.S. retailers. They could show whether fears are warranted about a worst-case scenario for the country, where stubbornly high inflation forms a devastating combination with a stagnating economy.
Hopes have climbed that the economy can avoid what’s called “stagflation” and hit the bull’s eye where it cools enough to get inflation under control but stays sturdy enough to avoid a bad recession.
Federal Reserve Chair Jerome Powell also gave financial markets comfort when he recently said the Fed remains closer to cutting rates than to raising them, even if inflation has remained hotter than forecast so far this year.
READ: US Fed’s Powell says inflation fight may take ‘longer than expected’
Some critics say the Fed may have to delay rate cuts for longer than traders expect because of continued pressure on inflation. The goal for inflation that “the Fed seeks is a pipe dream,” according to Barry Bannister, a managing director at Stifel.
He says all the downward pressure on inflation that an economy usually gets from a recession has already been wrung out following the U.S. economic slowdown from 2022 into 2023, and he expects the next big move of 500 points for the S&P 500 to be downward.
Best growth in nearly two years
In the meantime, a stream of stronger-than-expected reports on U.S. corporate profits has helped support the market. Companies in the S&P 500 are on track to report growth of 5.4 percent for their earnings per share in the first three months of the year versus a year earlier, according to FactSet. That would be the best growth in nearly two years.
Earnings season has nearly finished, and reports are already in for more than 90 percent of companies in the S&P 500. But this upcoming week includes Walmart and several other big names. They could offer more detail about how U.S. households are faring.
Worries have been rising about cracks showing in spending by U.S. consumers, which has been one of the bedrocks keeping the economy out of a recession. Lower-income households appear to be under particularly heavy strain amid still-high inflation.
In the bond market, Treasury yields eased a bit. The yield on the 10-year Treasury slipped to 4.48 percent from 4.50 percent late Friday.
READ: Global stocks mixed after Wall St closes another winning week
In stock markets abroad, Chinese indexes were mixed.
The Biden administration is expected to announce this week that it will raise tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, according to people familiar with the plan. Tariffs on electric vehicles, in particular, could quadruple to 100 percent.
Indexes slipped 0.2 percent in Shanghai and rose 0.8 percent in Hong Kong. Elsewhere in Asia and in Europe, most were modestly lower.