Wall Street holds relatively steady ahead of big tests this week
NEW YORK — U.S. stocks drifted through a quiet Monday to finish mixed, as markets around the world stabilized following 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 shockwaves through markets. The sharp rise for the Japanese yen following a hike to interest rates 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 upcoming 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 hiking 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.