Stock market today: Wall Street slips away from records after mixed data on the economy

NEW YORK (AP) — U.S. stocks are retreating from their record highs on Thursday following a series of mixed data on the economy.

The S&P 500 was down 0.3% in afternoon trading after swinging between earlier gains and losses. The Dow Jones Industrial Average was down 137 points, or 0.4%, as of 2:44 p.m. ET, and the Nasdaq composite was down 0.2%.

The bond market was more decisive and Treasury yields rose after a report showed inflation was slightly hottest at wholesale level last month than economists expected. It is the last of a data string in inflation that has been worse than expectedwhich has kept the door closed on earlier hopes that the Federal Reserve could begin cutting interest rates this month.

But other reports released in the morning showed some weakening in the economy, keeping hopes alive that the long-term trend in inflation remains bearish.

Traders still largely expect the Federal Reserve to begin cutting rates in June, according to CME Group data. The Federal Reserve's main rate is at its highest level since 2001 in hopes of reducing inflation, and cuts would ease pressure on the economy and financial system.

The question hanging over Wall Street is whether the latest signs of potentially persistent inflation will ultimately mean further delays to rate cut forecasts. That, in turn, could hurt the huge run U.S. stocks have been on since late October, rising in 16 of the last 19 weeks.

Traders moved a small part of their bets for the first interest rate cut to July since June.

"So far, the market has shrugged off concerns about persistent inflation and a cautious Fed," said Chris Larkin, managing director of E-Trade trading and investing at Morgan Stanley.

But the combination of data could lead the Federal Reserve to signal that it expects just two rate cuts this year, down from three, according to Brian Jacobsen, chief economist at Annex Wealth Management.

Federal Reserve officials will give their latest forecasts on where they see interest rates heading this year and next on Wednesday, following their latest monetary policy meeting.

Among the data they will reflect on is a report from Thursday that said Shoppers spent less at US retailers. last month than economists expected. These data weigh on the overall economy, but could also remove some upward pressure on inflation.

The government also said retail sales in January were weaker than previously thought. Previously, strong spending by American households was one of the lynchpins that kept the economy out of a recession despite high interest rates.

A separate report said fewer American workers applied unemployment benefits last week than expected. That's good news for workers in general. But excessive strength in the labor market, which has remained remarkably resilient, could add upward pressure on inflation.

The combination of data sent the 10-year Treasury yield up to 4.29% from 4.19% late Wednesday. The two-year yield, which more closely tracks the Federal Reserve's expectations, rose to 4.69% from 4.63%.

On Wall Street, Dollar General swung sharply despite reporting stronger-than-expected earnings and revenue for the latest quarter. Its shares fell 6% after rising more than 6% earlier in the morning.

Dollar General executives said inflation is pushing customers to make trade-offs in the aisles, moving away from non-essential products and well-known brands. It is also eliminating self-checkout at more than 300 of its stores that are experiencing large inventory losses.

A day earlier, rival Dollar Tree slumped after reporting weaker-than-expected results and saying it would close hundreds of its Family Dollar stores.

Dick's Sporting Goods rose 15.6% after it reported stronger-than-expected fourth-quarter earnings and raised its dividend.

Robinhood Markets gained 6.8% as stock and cryptocurrency prices neared records, fueling strong growth in trading activity among its clients last month.

US Steel sank 9.6% after presidency Joe Biden opposite the planned sale of the company to Nippon Steel of Japan.

Nippon Steel announced in December that it planned to buy the Pittsburgh-based steel producer for $14.1 billion in cash, raising concerns about what the transaction could mean for unionized workers, supply chains and U.S. national security.

U.S.-listed shares of Anheuser-Busch InBev fell 5.5% after Altria said it was selling a portion of its stake in the Budweiser maker. Altria offers 35 million of its 197 million ABI shares.

Homebuilder Lennar sank 6.2% despite reporting stronger-than-expected profit growth as its revenue fell short of analysts' forecasts.

In foreign stock markets, indices were mixed in Europe and Asia.

Japan's Nikkei 225 rose 0.3%, as speculation mounts that the Bank of Japan could soon end its policy of keeping interest rates below zero.

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AP Business writers Yuri Kageyama and Matt Ott contributed.

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