NEW YORK — The US stock market saw little movement on Monday, with the S&P 500 closing marginally lower as investors paused to assess upcoming economic data and earnings reports. The S&P 500 edged down by 1.26 points, or 0.02%, to 5,221.42, while the Dow Jones Industrial Average dropped 81.33 points, or 0.21%, to 39,431.51. In contrast, the Nasdaq Composite gained 47.37 points, or 0.29%, finishing at 16,388.24.
The market’s subdued performance came as investors took a step back following three consecutive weeks of gains. The Nasdaq and the S&P 500 had benefited from strong earnings reports and indications of a cooling labor market, which bolstered expectations for potential Federal Reserve rate cuts later this year.
A Federal Reserve Bank of New York survey released Monday indicated that Americans expect inflation to hit 3.3% a year from now, up from 3% in March. Over a three-year horizon, expectations are for inflation to be 2.8%. This followed a University of Michigan report showing US consumer sentiment had dropped to a six-month low in May, with households increasingly concerned about the cost of living.
The focus this week will be on key inflation reports. The Consumer Price Index (CPI) for April, due Wednesday, is highly anticipated. The CPI data will provide insights into whether inflationary pressures are easing or persisting. Economists forecast that core consumer prices rose 0.3% month-over-month in April and 3.6% year-over-year. Additionally, traders will be looking at the Producer Price Index (PPI), retail sales data, and weekly jobless claims, along with earnings reports from major retailers such as Home Depot and Walmart.
“Investors are like someone peeking out the window to check the weather before deciding what to wear,” said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas. “Today and tomorrow are all about Wednesday’s consumer inflation report.” McKinney noted that recent inflation data have often surprised to the upside, leading investors to adjust their expectations for rate cuts.
Anthony Saglimbene, chief market strategist at Ameriprise, highlighted the impact of deteriorating consumer sentiment and rising inflation expectations on the market. “Stocks are stuck in a tight trading range until we get more information on inflation trends,” he said. The Fed’s stance will be crucial, as Vice Chair Phillip Jefferson supported keeping interest rates steady until there is clearer evidence that price pressures are moderating.
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Among the S&P 500’s 11 major industry sectors, only two showed gains on Monday. Technology stocks led the way, with Apple being a notable contributor. Apple shares rose 1.8% after reports indicated that the company was nearing an agreement with OpenAI, the maker of ChatGPT, to integrate its technology into iPhones. OpenAI, backed by Microsoft, is expected to release a new AI model capable of realistic voice conversations and cross-modal interactions.
Alphabet, set to unveil new AI features at its developer conference on Tuesday, saw its shares rise 0.3% after initially falling by 2.7% during the session. In contrast, shares of GameStop soared by 74% following the return of “Roaring Kitty,” a prominent figure from the 2021 meme stock rally, to social media platform X.com. AMC Entertainment and Koss Corp, also part of the meme stock trend, saw significant gains, with AMC rising 78% and Koss closing up 36.7%.
Overall trading volume was lower, with 10.09 billion shares changing hands compared to the 10.79 billion average over the past 20 sessions. Advancing issues slightly outpaced decliners on both the NYSE and Nasdaq. The NYSE saw 311 new highs and 40 new lows, while the Nasdaq recorded 145 new highs and 91 new lows.
As investors await critical economic data and the Federal Reserve’s next moves, market sentiment remains cautious. The upcoming reports and central bank decisions will likely provide further direction for equities and influence the broader financial landscape in the coming weeks.
