NEW YORK (AP) — U.S. stock indexes are lower Tuesday as traders make their final moves ahead of several potentially market-moving reports.
The S&P 500 index fell 0.4% in late trading, on track for another quiet day after barely gaining on Monday. With one hour left in trading, the Dow Jones Industrial Average was down 199 points, or 0.5%, and the Nasdaq Composite Index was down 0.3%.
Treasury yields fell in the bond market ahead of Wednesday's much-awaited update on U.S. consumer-level inflation. Other reports on inflation will be released this week, as major U.S. companies begin reporting how much profit they made in the first three months of the year.
The question hanging over Wall Street is whether inflation will cool enough to convince the Fed to cut interest rates, which traders are desperate for and are betting on. Traders now expect only two or three rate cuts this year, with some doubts raised after a series of better-than-expected economic reports. Some people say there is zero possibility. That's lower than the six to seven cuts expected at the beginning of the year, according to CME Group data.
The Fed's key interest rate is at its highest level in more than 20 years, and there are concerns that if rates remain high for too long they could trigger a recession.
If cuts are further reduced this year, the onus will be on companies to deliver strong profit growth to justify the big moves in stock prices since the fall. The S&P 500 soared more than 20% from November to March, setting multiple records along the way. Critics say the stock looks expensive on several measures and say earnings need to rise or interest rates need to fall to make the stock look more reasonable.
Bank of America strategists expect Wednesday's inflation update to show a subside after ignoring food and energy prices, which can zigzag sharply. Such an outcome is likely to increase traders' expectations for a rate cut in June, with the market currently looking at a slight rate cut as better than the odds of a coin toss.
This year's rise in oil prices has raised concerns about spillovers into inflation, but the central bank has said that “to have a meaningful impact on core inflation, the levels seen even at the peaks in commodity prices in Russia and Ukraine are necessary.'' It is highly likely that oil prices will need to rise by a significant amount. U.S. strategists said in a BofA Global Research report.
Benchmark U.S. crude oil fell $1.20 a barrel to settle at $85.23, marking a year-to-date gain of less than 20%. Brent crude, the international standard crude, fell 96 cents to $89.42.
On Wall Street, some of the biggest winners in the market frenzy over artificial intelligence technology gave back some of their huge profits, sending the market lower.
Nvidia fell 3.3% and was the single biggest drag on the S&P 500, as it is one of Wall Street's biggest stocks. Super Micro Computer Co. is down 3.4%, but the company's stock price has still more than tripled since the beginning of the year.
Tilray Brands fell 20.5% after the cannabis company reported weaker-than-analyst-expected revenue growth in its latest quarter.
Norfolk Southern Railway rose 0.8% despite the railroad's preliminary first-quarter results falling short of analysts' expectations.
The company also agreed to pay $600 million to settle a class action lawsuit related to last year's fire-induced train derailment in eastern Ohio. The company says if the agreement is approved by a court, it will resolve all class action claims within a 20-mile radius of the derailment and personal injury claims within a 10-mile radius if you choose to participate. .
In the bond market, the yield on the 10-year U.S. Treasury note fell to 4.36% from 4.42% late Monday.
In Europe, stock indexes fell ahead of the European Central Bank's decision on interest rates on Thursday. Many investors expect interest rates to remain unchanged.
Asian stock indexes were mixed, with Tokyo's Nikkei 225 rising 1.1%, while South Korea's Kospi fell 0.5%.
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AP writers Matt Ott and Zimo Zhong contributed.
