Stabilized US stock market drifts to mixed finish | The Arkansas Democrat-Gazette

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NEW YORK -- U.S. stocks drifted through a quiet Monday to finish mixed, as markets around the world stabilized after a wild week of extreme swings.

The S&P 500 finished little changed, edging up by less than 0.01%, after flipping between small gains and losses through the day. The Dow Jones Industrial Average slipped 140 points, or 0.4%, and the Nasdaq composite rose 0.2%.

Many European and Asian stock markets were also relatively quiet. That's a notable turn after last week kicked off with the worst day for Japanese stocks since the Black Monday crash of 1987, only to give way to the best day since 2022 for U.S. stocks.

The value of the Japanese yen eased on Monday, calming some more after an earlier surge sent shock waves through markets. The sharp rise for the Japanese yen after an interest rate increase by the Bank of Japan forced many hedge funds and other investors to abandon a popular trade all at once, where they had borrowed yen at cheap rates to invest elsewhere. The forced selling reverberated around the world.

A promise last week by a top Bank of Japan official not to raise rates further as long as markets are "unstable" has helped calm the market. But other worries were also behind last week's turbulence for markets, including concerns about a slowing U.S. economy.

This week will feature reports on inflation and how much U.S. shoppers are spending at retailers. The best-case scenario for Wall Street would be data showing a continued slowdown in inflation, combined with strengthening U.S. retail sales.

That would indicate the Federal Reserve is successfully walking the tightrope it's been attempting since it began raising interest rates sharply in 2022: It wants the U.S. economy to slow by enough to snuff out high inflation, but not so much that it causes a recession.

A string of worse-than-expected economic data recently has raised worries the Fed may be leaning too far to one side on the tightrope after keeping its main interest rate at a two-decade high. The lowlight came earlier this month when a report showed hiring by U.S. employers weakened by far more than expected.

For the inflation data, meanwhile, strategists at Bank of America led by Ohsung Kwon say a hotter-than-expected reading would be a bigger surprise for the market than a cooler-than-expected figure. That could lead to "a major downside event" for the market if inflation readings come in worse than forecast.

The Fed does not have an easy way to fix a weakening economy where inflation in worsening, a phenomenon called "stagflation." The central bank could ease rates, which would give the U.S. economy an upward push but also threaten to worsen inflation. Or it could continue to keep its rate high. That would put downward pressure on inflation but also inflict more pain on the economy.

Of course, the U.S. economy is still growing, and many economists see a recession as unlikely. But worries about it have nonetheless put downward pressure on Treasury yields in the bond market.

They fell again Monday ahead of the upcoming data reports. The yield on the 10-year Treasury slipped from 3.94% to 3.90% late Friday. The two-year Treasury yield, which more closely tracks expectations for Fed action, fell from 4.06% to 4.01%.

On Wall Street, the majority of stocks weakened. But a 4.1% jump for Nvidia helped offset many of those losses. Because it's one of the largest U.S. stocks by value, Nvidia's movements carry extra weight on the S&P 500 and other indexes.

It and other Big Tech behemoths have been shaky recently and have been mostly declining the last month on worries their stocks shot too high in Wall Street's frenzy around artificial-intelligence technology.

All told, the S&P 500 rose by less than a quarter of a point, 0.23, to 5,344.39. The Dow dropped 140.53 to 39,357.01, and the Nasdaq composite gained 35.31 to 16,780.61.

Information for this article was contributed by Matt Ott and Elaine Kurtenbach of The Associated Press.

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