Wall Street’s momentum cools after its latest record-setting day

FILE – The New York Stock Exchange is framed by a subway entrance on Tuesday, May 28, 2024 in New York. World stocks are higher on Thursday, June 6, 2024, after Wall Street barreled to new records as the frenzy around artificial-intelligence technology keeps sending stocks higher. (AP Photo/Peter Morgan, File)

NEW YORK — U.S. stocks held steady Thursday as Wall Street’s momentum cooled following its latest record-setting day.

The S&P 500 barely budged a day after leaping to set an all-time high for the 25th time this year. It dipped by 1.07, or less than 0.1 percent, to 5,352.96. The Dow Jones Industrial Average added 78.84, points, or 0.2 percent, to 38,886.17, while the Nasdaq composite slipped 14.78, or 0.1 percent, to 17,173.12 after hitting its own record.

Big Lots tumbled 18.2 percent after reporting a larger loss for the latest quarter than expected. The retailer said it missed targets for sales because its customers are continuing to pull back on their spending, particularly for things that aren’t essentials.

Another retailer, Five Below, gave more discouraging comments about how its customers are doing. Its profit and revenue last quarter fell short of analysts’ expectations, and CEO Joel Anderson said struggles for the company’s core lower-income customers dragged on results, even as it saw strong growth from its higher-income customers. Five Below’s stock fell 10.6 percent.

READ: Consumer confidence sees surprise uptick in May: survey

Many retailers and other companies have been highlighting a split between their customers making lower and higher incomes. Inflation is particularly hurting those at the lower end, who are struggling to keep up with a cost of living that’s still rising, even if inflation is not as fast as before.

That threatens to crack a linchpin that’s kept the U.S. economy out of a recession despite high interest rates: strong spending by U.S. households.

Another factor that’s helped U.S. consumer spending stay so strong has been a remarkably solid job market. A report on Thursday showed some potential softening there as well.

Solid job market

More U.S. workers applied for unemployment benefits last week than the week before when economists were expecting to see a slight decline. The numbers are still low compared with history, but they could suggest some slowing in the job market.

Wall Street is hoping for just such a slowdown. That’s because a cooldown can drive inflation lower and convince the Federal Reserve to deliver the cuts to interest rates that traders desire so much. The danger is if the slowdown of the economy overshoots and turns into a recession, which would ultimately hurt stock prices.

READ: US job openings fall to 8.1 million, lowest since 2021

In a potentially discouraging signal for markets, a separate report on Thursday said the productivity of U.S. workers wasn’t quite as strong in the first three months of the year as economists thought. That’s key because strong productivity gains could allow wages for U.S. workers to keep rising without adding as much upward pressure on inflation.

After the economic reports, Treasury yields held relatively steady. The yield on the 10-year Treasury remained at 4.28 percent, where it was late Wednesday.

On Wall Street, Lululemon Athletica climbed 4.8 percent after reporting better profit for the latest quarter than analysts expected, in large part because of strong growth in sales outside the Americas. J.M. Smucker rose 4.6 percent after the company behind Uncrustables and Jif peanut butter likewise topped profit expectations.

Robinhood Markets rose 6.4 percent after saying it agreed to buy Bitstamp, a cryptocurrency exchange. Robinhood said the deal, which still needs regulatory approvals, will bring in customers from around the world, including the European Union and Asia.

GameStop soars

GameStop soared 47.5 percent in the latest whipsaw move for the video game retailer’s stock. It’s been particularly volatile since a central character from its initial supernova run in 2021 recently returned to social media after a yearslong hiatus.

The online hero, who goes by Roaring Kitty among other nicknames, is scheduled to return to YouTube for a live stream on Friday.

READ: GameStop leaps in premarket as Roaring Kitty may hold large position

Nvidia, meanwhile, reversed an early gain and slipped 1.1 percent a day after becoming the third company to see its total value top $3 trillion. The chip company has been riding a tidal wave of enthusiasm for artificial intelligence technology.

Trading could be more exciting on Friday, when the U.S. government offers the latest monthly update on the job market. Economists expect it to show slight accelerations in hiring and average hourly wage gains from the month before.

“Policymakers have reasons to start feeling cautiously optimistic on the labor market front as wage growth is returning to a sustainable range while labor turnover is softening,” according to Roger Aliaga-Diaz, Vanguard’s chief Americas economist.

As of now, virtually no one expects the Federal Reserve to make any move on interest rates at its meeting next week. But the hope is still for the Fed to cut its main interest rate at least once this year, down from its highest level in more than two decades.

The European Central Bank on Thursday became the latest in the world to cut its interest rates. The bank’s president, Christine Lagarde, said inflation there had eased enough to begin lower rates but declined to say how the future path lower would look.

Stock indexes rose modestly in Europe following the widely expected decision. They were mixed in Asia, with indexes up 0.6 percent in Tokyo, down 0.5 percent in Shanghai, and closed for trading because of a holiday in Seoul.