Stock market today: Wall Street drifts ahead of reports on inflation, big retailers’ profits

The S&P 500 slipped 3.69 points, or 0.1%, to 4,411.55. The Dow Jones Industrial Average gained 54.77, or 0.2%, to 34,337.87, and the Nasdaq composite fell 30.36, or 0.2%, to 13,767.74.

The market was coming off a week with relatively few reports to give hints on Wall Street’s central questions: When will the Federal Reserve halt its hikes to interest rates and begin cutting them, and can the economy stay as resilient as it has? But this week will offer more, including the latest monthly update on inflation and earnings reports from some of the nation’s biggest retailers.

The profit reporting season for the summer is winding down, and the majority of companies have again topped analysts’ expectations. 

The economy has remained strong, even though the Federal Reserve has hiked its main interest rate to its highest level since 2001 in hopes of stamping out high inflation. But worries remain about whether it can stay solid as the full effects of rate hikes make their way through the system.

That’s why so much attention will be on Tuesday’s inflation report. The hope is that inflation will continue to cool from its peak in the summer of 2022, when it topped 9%, and convince the Federal Reserve that no more hikes to rates are necessary. That in turn could speed up the timeline for potential cuts to interest rates, which can juice financial markets.

Economists expect the report to show that consumers paid prices that were 3.3% higher in October than a year earlier, down from September’s inflation rate of 3.7%.

With inflation generally cooling, Federal Reserve Chair Jerome Powell gave some hope recently that a recent rise in longer-term Treasury yields could act as substitutes for further rate hikes, which could mean the Fed may be done with them. But Powell said last week the Fed would not hesitate to hike rates again if needed.

In the bond market, the yield on the 10-year Treasury dipped to 4.62% from 4.63% late Friday. It’s come down over the last month on hopes the Fed may be done with its rate hikes, but it’s still well above where it’s been for years.

The credit-rating agency Moody’s said late Friday that it could eventually downgrade the top-tier “AAA” rating it has for U.S. government debt given the cost of rising interest rates and political polarization in Congress.

The latter has been playing out in another showdown that could result in a U.S. government shutdown.