Wall Street drifts after lukewarm report on economy Action News Jax

NEW YORK — (AP) U.S. stocks are drifting Monday to begin what could be a quiet period after their best week since March.

The S&P 500 was up 0.1% in morning trading. The Dow Jones Industrial Average fell 120 points, or 0.3%, to 33,652 at 11:15 a.m. Eastern Time, while the Nasdaq composite was up 0.4%.

Indexes were listless after a report showed that businesses in the lodging, construction and other U.S. services sectors grew for a fifth straight month in May, albeit by less than economists had expected. It’s the latest mixed reading on the US economy, which has begun to slow under the weight of higher interest rates but has so far defied forecasts of a recession.

More stocks in the S&P 500 fell than rose, but a gain for market heavyweight Apple helped stabilize Wall Street. It rose 1.7% before a event where it is expected to unveil a long rumored headset which will place its users between the virtual and real world,

In the oil market, crude oil gained after that Saudi Arabia said it would scale back production hoping to drive up the price. A barrel of US crude rose 1.2% to $72.62, and a barrel of Brent oil, the international standard, rose 0.6% to $76.60.

Both were close to $120 a year ago, and their prices have plummeted on concerns that a strapped global economy would consume less fuel.

Elsewhere, Wall Street was relatively calm. There’s little in the way of earnings reports and top-tier economic data for the next week. That leaves few clues to the dominant question hanging over the market: Which comes first, the economy going into recession or inflation declining enough for the Federal Reserve to lower interest rates?

That’s why there’s a lot of focus on next week when the government will release the latest monthly updates on consumer and wholesale inflation. It’s also when the Fed next meets to discuss interest rate policy. Traders are largely betting it will hold rates, which would be the first meeting where it hasn’t risen in over a year.

However, the bet on Wall Street is that it could resume rate hikes in July. The reason for such a pause would be to give the Fed time to assess its furious pace of rate hikes over the past year.

The purpose of high rates is lower inflation by slowing down the entire economy and driving down prices for stocks, bonds and other investments. With rates at their highest level since 2007, several high-profile US bank failures the market has been shaking up since March, while the manufacturing industry has been shrinking for months.

Nevertheless, the labor market has managed to remain remarkably solid. That has helped US households to keep spending, which has kept the economy out of recession. Last week, data showed that U.S. employers unexpectedly accelerated their hirings in May, while worker wage increases slowed to keep inflation under some pressure.

Despite all the uncertainty about the economy, after weeks of gains, Wall Street remains on the brink of what has been called a bull market.

The S&P 500 is just below 4,290, and if it ends the day above 4,292.44, it will be more than 20% higher than where it was in mid-October. That would mean Wall Street’s main health metric has transformed from the frigid bear market, when it fell more than 20% in nine months, into a powerful bull.

In the bond market, the yield on the 10-year Treasury fell to 3.67% from 3.70% late Friday.

The two-year Treasury, which moves more based on expectations for the Fed, fell from 4.51% to 4.47%. It had been higher earlier in the morning ahead of the weaker-than-expected US services sector report.

On the foreign stock markets, the indices in Europe were usually lower. Japan’s Nikkei 225 rose 2.2%, while gains in other Asian markets were more modest.

AP Business Writers Matt Ott and Joe McDonald contributed.

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