The S&P 500 closed barely changed Monday as investors took a breather after three weekly gains and awaited key inflation readings and earnings reports due this week while a survey showed consumers concerned about inflation.

A Federal Reserve Bank of New York survey, released on Monday, found that Americans see inflation at 3.3% a year from now from March’s 3% while they expect inflation three years from now at 2.8%. On Friday, a University of Michigan report showed U.S. consumer sentiment sagged to a six-month low in May as households worried about the cost of living.

Last week the Nasdaq composite and the S&P 500 both finished three weeks of gains, boosted by strong earnings reports, and signs of a cooling labor market that fueled bets of one or two Federal Reserve rate cuts this year.

Investors were cautiously awaiting April’s Consumer Price Index (CPI) data due out on Wednesday. They will also be monitoring producer price index data, retail sales data, weekly jobless claims and earnings reports from big retailers Home Depot and Walmart, all due this week.

“Investors are like somebody looking out the window trying to see what the weather’s like before deciding what to wear. Today and tomorrow are going to be all about Wednesday’s consumer inflation report,” said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas.

“In the last 3 months that’s been the single biggest mover. Each of these times inflation’s come in a little bit stickier than investors had expected. Each time that’s happened investors have ratcheted back expectations for interest rate cuts.”

According to preliminary data, the S&P 500 lost 0.94 points, or 0.02%, to end at 5,221.74 points, while the Nasdaq Composite gained 49.55 points, or 0.30%, to 16,390.42. The Dow Jones Industrial Average fell 79.17 points, or 0.20%, to 39,433.67.

Anthony Saglimbene, Ameriprise chief market strategist, said the “marked deterioration in consumer sentiment and rising expectations around inflation” from the consumer sentiment surveys puts even more weight on the upcoming inflation data.

“Stocks are just kind of stuck in this really tight trading range until we get some more information on inflation trends,” said Saglimbene.

Core consumer prices are expected to have risen 0.3% on a month-over-month basis in April and 3.6% on an annual basis according to economist forecasts in a Reuters poll ahead of Wednesday’s release.

Fed Vice Chair Phillip Jefferson said he supports keeping interest rates steady until it is clear that price pressures are moderating.

Alphabet fell slightly as Microsoft-backed OpenAI looked set to announce its artificial intelligence (AI)-powered search product. Meta Platform was down also declined.

Apple shares rose after a report said it had closed in on an agreement with ChatGPT-maker OpenAI to use the startup’s technology on the iPhone.

Meanwhile, shares of videogame retailer GameStop jumped soared after “Roaring Kitty,” a former marketer at an insurance firm credited with sparking the 2021 meme stock rally, returned to after a three-year hiatus.

Other highly shorted names involved in the 2021 meme rally including AMC Entertainment and Koss Corp also rose on Monday.

© 2024 Thomson/Reuters. All rights reserved.

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