May 28th, 2024

Stock market today: Wall Street drifts around the edge of its record


By Stan Choe, The Associated Press on May 13, 2024.

Currency traders watch computer monitors near the screen showing the Korean Securities Dealers Automated Quotations (KOSDAQ) and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Monday, May 13, 2024. Asian stocks were mostly lower on Monday after Wall Street coasted to the close of another winning week.(AP Photo/Lee Jin-man)

NEW YORK (AP) – U.S. stocks are ticking higher Monday and adding to what’s been a solid May following their rough April.

The S&P 500 was up 0.2% in early trading and pulling within 0.4% of its record set at the end of March. The Dow Jones Industrial Average was up 88 points, or 0.2%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.

Stocks have rallied this month 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 on 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 shed light on 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 recently 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 U.S. central bank remains closer to cutting rates than to raising them, even if inflation has remained hotter than forecast so far this year.

The Fed has been holding its main interest rate at the highest level in more than two decades in hopes of slowing down the overall economy to force inflation lower.

In the meantime, a stream of stronger-than-expected reports on U.S. corporate profits has also helped to support the market. Companies in the S&P 500 are on track to report growth of 5.4% 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.

Much of the growth, once again, has come from the big “Magnificent Seven” companies that accounted for most of the stock market’s returns last year, including Alphabet, Meta Platforms and Microsoft. But more companies across the index than usual have been topping analysts’ forecasts for profit during the first quarter.

Earnings season has nearly finished, and reports are already in for more than 90% 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 because of still-high inflation and higher credit-card rates.

On Wall Street, Incyte climbed 7.8% after saying it would buy back up to $2 billion of its stock. The biopharmaceutical company is the latest to say it will return cash to shareholders through such purchases, which can goose the amount of earnings that each remaining share is entitled to.

GameStop soared 54% in a swing reminiscent of its maniacal moves a little over three years ago. That’s when hordes of smaller-pocketed and novice investors sent the stock’s price way above what many financial analysts and professional investors called rational. One believer in particular, who sometimes went by the nickname Roaring Kitty, helped lead the charge, and a post on a social media account linked to him was stirring more adrenaline.

In the bond market, Treasury yields were easing. The yield on the 10-year Treasury slipped to 4.46% from 4.50% late Friday.

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%.

Indexes slipped 0.2% in Shanghai and rose 0.8% in Hong Kong.

Indexes elsewhere in Asia and in Europe were mostly modestly lower.

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AP Writer Zimo Zhong contributed.

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