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

NEW YORK (AP) — U.S. stocks are rising Monday, adding to what has been a strong May after a difficult April.

The S&P 500 rose 0.2% in early trading and moved within 0.4% of its record set in late March. The Dow Jones Industrial Average was up 88 points, or 0.2%, as of 9:35 a.m. ET, and the Nasdaq composite was up 0.3%.

Stocks have risen this month on revived hopes that inflation can slow enough convince the Federal Reserve to reduce its main interest rate at the end of this year. A key test of those hopes will come Wednesday, when the U.S. government provides its latest monthly update on the inflation that households across the country are feeling.

Other reports this week include updates on the inflation wholesalers are seeing and sales at U.S. retailers. They could shed light on whether fears about a worst-case scenario for the country, where persistently high inflation forms a devastating combination with stagnant inflation, are justified. economy.

Hopes have been rising recently that the economy can avoid what is called “stagflation” and hit the target where it cools off enough to control inflation but remains strong enough to avoid a bad recession. Federal Reserve Chairman Jerome Powell also reassured financial markets when he said recently that the US central bank remains closer to reducing rates have to increase them, even if inflation has remained above expectations so far this year.

The Federal Reserve has kept its main interest rate at the highest level in more than two decades in hopes of slowing the broader economy to force inflation down.

Meanwhile, a series of better-than-expected reports on US corporate earnings have also helped support the market. S&P 500 companies are on track to report 5.4% growth in earnings per share in the first three months of the year compared to a year ago, according to FactSet. It would be the best growth in almost two years.

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

Earnings season is almost over and there are already reports from more than 90% of the companies in the S&P 500. But next week includes Walmart and several other big names. They could offer more details about how American households are faring.

Concerns have grown about cracks showing in American consumer spending, which has been one of the foundations keeping the economy out of a recession. Low-income households appear to be under particularly strong pressure due to still high inflation and higher credit card rates.

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

GameStop soared 54% in a swing reminiscent of your manic movements just over three years ago. Is when hordes of novice investors with smaller pockets sent the stock price well above what many financial analysts and professional investors called rational. One believer in particular, sometimes nicknamed Roaring Kitty, helped lead the charge, and a post on a social media account linked to him was sparking more adrenaline.

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

In overseas stock markets, Chinese indices were mixed. The Biden administration is expected to announce this week that increase 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%.

The indices fell 0.2% in Shanghai and rose 0.8% in Hong Kong.

Rates elsewhere in Asia and Europe were mostly modestly lower.

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AP journalist Zimo Zhong contributed.

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