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S&P 500 edges down, investors and consumers wary of inflation

Published 05/13/2024, 02:49 PM
Updated 05/13/2024, 03:06 PM
© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024.  REUTERS/Brendan McDermid

By Sinéad Carew and Sruthi Shankar

(Reuters) - U.S. stock indexes were a mixed bag on Monday, with the S&P 500 staying shy of its March record high as investors waited for 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.

The Nasdaq composite was advancing while the S&P 500 slipped. Both just 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 on Monday were cautiously awaiting producer price index data, consumer inflation data, retail sales data, weekly jobless claims and earnings reports from big retailers including Home Depot (NYSE:HD) and Walmart (NYSE:WMT) all due this week.

"Stocks are just kind of stuck in this really tight trading range until we get some more information on inflation trends," said Anthony Saglimbene, Ameriprise Chief Market Strategist.

With the New York Fed report and Friday's report showing "a marked deterioration in consumer sentiment and rising expectations around inflation" Saglimbene said this would put even more weight on the inflation reports.

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.

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

At 02:20 p.m. the Dow Jones Industrial Average fell 60.35 points, or 0.15%, to 39,452.34, the S&P 500 lost 1.90 points, or 0.04%, to 5,220.75 and the Nasdaq Composite gained 43.51 points, or 0.27%, to 16,384.38.

Of the 459 S&P 500 companies that reported through Friday, 77.3% beat analysts' profit estimates, according to LSEG data. The long-term average is 66.7%.

Meanwhile, shares of videogame retailer GameStop (NYSE:GME) jumped 78% 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 also rallied with AMC up 60% and Koss Corp adding 32%.

Alphabet (NASDAQ:GOOGL) fell 0.4% as Microsoft-backed OpenAI looked set to announce its artificial intelligence (AI)-powered search product. Meta (NASDAQ:META) Platform was down 2%.

© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024.  REUTERS/Brendan McDermid

Apple (NASDAQ:AAPL) added 2% after a report said it had closed in on an agreement with ChatGPT-maker OpenAI to use the startup's technology on the iPhone.

Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE where there were 280 new highs and 36 new lows. On the Nasdaq, 2,380 stocks rose and 1,754 fell as advancing issues outnumbered decliners by a 1.35-to-1 ratio.

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