Wall Street capped a choppy day of trading with a mixed finish for stock indexes Monday, as investors brace for another sharp interest rate hike by the Federal Reserve this week as the central bank combats inflation.
The S&P 500 edged up 0.1% after fluctuating between gains and losses. The Dow Jones Industrial Average rose 0.3%, while the tech-heavy Nasdaq Composite fell 0.4%.
Smaller company stocks fared better than the broader market, sending the Russell 2000 0.6% higher.
The major indexes are coming off solid gains last week following a mix of mostly better-than-expected reports on corporate profits. Falling yields in the bond market also helped, easing the pressure on stocks after expectations for rate hikes by the Fed sent yields soaring much of this year.
On Wednesday, most economists expect the Fed to announce a three-quarter percentage point hike in its short-term rate, a second consecutive hefty increase that it hasn't otherwise implemented since 1994. It would put the Fed's benchmark rate in a range of 2.25% to 2.5%, the highest since 2018.
Wall Street will closely watch a news conference by Fed Chair Jerome Powell on Wednesday to get a sense of policymakers' next steps.
"The only question is will Powell sound a little less hawkish in his press conference, which could allow the market to continue to breathe a sigh of relief," said Sam Stovall, chief investment strategist at CFRA.
The U.S. economy is slowing, but healthy hiring shows it isn't yet in recession, Treasury Secretary Janet Yellen said Sunday on NBC's "Meet the Press." She spoke ahead of a slew of economic reports due this week that will shed light on an economy currently besieged by rampant inflation.
Since the Fed last met in June, the government has reported that inflation accelerated to a 9.1% annual rate, the most since 1981.
Still, some early signs suggest that inflation may be cooling from red-hot levels. Auto club AAA said on its website as of Monday that the average price of a gallon of regular gas is $4.36 per gallon. That's down 16 cents from a week ago, and 55 cents cheaper than late June, when the average price was $4.91 per gallon. Crude oil prices have fallen nearly 10% this month alone.
Even so, elevated inflation is increasingly prompting consumers to reprioritize their spending.
Walmart's shares fell nearly 10% in after-hours trading Monday after the retail giant lowered its profit outlook for the second quarter and full year. The company blamed surging inflation on basics like food that are forcing shoppers to cut back on discretionary items, particularly clothing, that carry higher profit margins.
Outside of the Fed meeting, the week's highest-profile report will likely be Thursday, when the Commerce Department releases its first estimate of the economy's output in the April-June quarter. Some economists forecast it may show a contraction for the second quarter in a row. The economy shrank 1.6% in the January-March quarter. Two straight negative readings is informally considered a recession.
On Wall Street, the S&P 500 rose 5.21 points to close at 3,966.84 Monday. The Dow gained 90.75 points to 31,990.04, and the Nasdaq fell 51.45 points to 11,782.67. The Russell 2000 added 10.89 points to 1,817.77.
Energy companies, banks and health care stocks helped lift the market Monday. Exxon Mobil rose 3.3% and Bank of America added 0.9%. UnitedHealth Group gained 1.5%.
Losses by technology and communications stocks kept indexes' gains in check. Chipmaker Nvidia fell 1.7% and Meta closed 1.6% lower.
Restaurant chains, retailers and other companies that rely on direct consumer spending also fell. Olive Garden owner Darden Restaurants dropped 2.1%, while Dollar Tree fell 2.1%.
World Wrestling Entertainment jumped 8.4% after CEO Vince McMahon retired Friday amid an investigation into alleged misconduct.
Weber slumped 12.6% after the Illinois-based grill maker announced the departure of CEO Chris Scherzinger. It also pulled its 2022 forecast and suspended its dividend.
Newmont slid 13.2% for the biggest decline in the S&P 500 after the gold miner's second-quarter earnings fell sharply from a year earlier amid higher costs and weaker gold prices.
Bond yields rose. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.04% from 2.97% late Friday. The 10-year yield, which influences mortgage rates, rose to 2.81% from 2.78%.
Earnings were mostly quiet, but pick up later this week when technology heavyweights like Apple, Meta, Microsoft and Amazon all report their results. Other big companies reporting this week include Coca-Cola and McDonald's, where investors may look to see the impact of inflation on these inflation-conscious, consumer-facing companies.